Changes to Property Taxation

If you own a property based business, you will not be alone if you are concerned by the huge tax changes announced in this sector over the past 3 years.

The government seems to be using the housing market to ‘rebalance’ the economy and, in essence, this means making landlords pay more tax so that investment in property becomes less attractive, thereby suppressing house price inflation.

The following are the headline changes:

a) Tax relief on interest payments to be restricted so that it is only relieved ‘as if the landlord was a 20% taxpayer’ by 2020 (if you are a basic rate taxpayer and think this can’t affect you, think again!)

b) An SDLT surcharge of 3% levied on all buy to lets and second homes from April 2016

c) The 10% tax deduction for Wear & Tear Allowance was abolished from April 2016

d) UK non-residents to be charged capital gains tax from April 2015

e) No capital allowances claims for purchaser of commercial property after April 2014, unless the vendor has already ‘pooled’ the assets in a property which are eligible.

f) Non domiciled individuals to be subject to IHT on UK property as from 2017.

g) The ‘annual tax on enveloped dwellings’ (for residential property owned wholly or partly by a company) has been with us since 2013, but in the 3 years since then the lowest level for the charge to bite has reduced from £2,000,000 to £500,000.

The full effect of these changes may not yet be fully appreciated, and the results for many could be devastating; however, the changes will have less of an impact on property investors who make plans to adapt.

Sutton McGrath Hartley is a multi-disciplinary firm of chartered accountants, financial advisers and lawyers offering comprehensive financial expertise for all business, personal and family interests. Our specialist Taxation department can help with property related tax planning. To discuss your requirements please contact David Sutton on 0114 266 4432 or


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