Budget 2017: What property investors need to know

Last updated: 25 November 2017

Ever since George's surprise attack on landlords in 2015, the Budget has become the scariest day in a landlord's calendar. This year, it was mercifully dull – so dull that I felt the need to comb through the small print to see if anything nasty had been hidden.

I'll ignore all the talk of new garden cities, building targets and billions of new investment – because we hear it every time, and nothing much ever seems to happen. Instead, here are the few items that will be of relevance to landlords…

Stamp Duty

The headline-grabber in the Budget was the removal of Stamp Duty Land Tax (SDLT) for properties selling for under £300,000 – but only for first-time buyers. For first-time buyers buying a property up to £500,000, the first £300,000 is SDLT-free.

For investors, this doesn't make much difference – except that investors often target similar properties to first-time buyers, and they'll now find it harder to compete. For a £200,000 purchase, an investor will still need to find £7,500 in Stamp Duty whereas a first-time buyer now won't pay anything.

Freeze of indexation allowance

Unlike individuals, companies don't pay Capital Gains Tax (CGT): instead, when they sell an asset they pay Corporation Tax on the profit they realise on the gain.

Until now, companies have benefited from “indexation allowance” – meaning that effectively, any amount of gain attributable to inflation isn't taxed. From January 2018, this will be frozen (and presumably removed later).

This isn't a retrospective change, so if you already own property in a company you can claim this allowance for any gains up until January 2018.

This just brings companies into line with individuals, and many landlords with property in a company probably didn't know the relief existed anyway so won't feel too hard done-by. Also, because company gains attract Corporation Tax rather than CGT, they're taxed at 19% (currently) rather than the top personal CGT rate of 28% – although companies don't benefit from a CGT allowance, so it's swings and roundabouts really.

Council tax premium for empty properties

The Budget contained an announcement that councils would be allowed to charge a 100% Council Tax premium on empty properties – effectively meaning that you can be charged double for leaving a property empty.

At first this seemed like it could be an extra expense for properties that are empty between tenancies or undergoing light refurbishment, as councils are unnaturally efficient at getting a bill through the door as soon as a property becomes empty.

But it turns out that this only applies to properties that have been empty for two years. And if you've got a property that's been empty for that long, you really need to get a move on with your refurb or rethink your marketing.

Dividend allowance reduced

Not actually part of the Budget, but the previously-announced-then-shelved reduction in the dividend allowance is now back on the agenda and seems like it will come in from April 2018.

Previously, everyone could earn £5,000 per year from dividends without any tax being due. Now, that allowance is being cut to £2,000.

That's bad news for anyone who owns property in a company and wants to extract profits in the form of dividends (which is typical), because now a greater amount of those dividends will be taxed.

Incentives for longer tenancies

As previously announced, the government has said again that it will be “consulting” on incentives for allowing longer tenancies – but there's still no more detail on what that might look like. I'm hoping for a cuddly toy, personally.

And that's that! We can all breathe a sigh of relief until Spring…