Partner Article

Autumn Statement 2013 reaction: Property

The Chancellor has closed his red box for another year, and so in this edition of Baker Tilly’s weekly round-up of the most important tax news, we give our thoughts and opinions on Autumn Statement 2013.

With much more work to be done to repair the UK economy after the worst financial crisis for many generations, and an election to be fought in 2015, there’s a wide range of tax proposals to give relief where it’s felt to be due and impose extra taxes on others.

The trend of reducing business taxes to boost the economy is set to continue, with the burden of taxes paid by individuals increasing to reflect this. As a result, the “bottom” 30% and the “top” 10% of UK households will be worse off in 2014/15, with the middle 60% unchanged or better off.

Property taxes in its various forms – Capital Gains Tax (CGT), Stamp Tax (SDLT), aggregates levy, business rates etc. took its usual place in a ‘budget’ statement. Other than the CGT proposals and business rates, most were very low profile tinkering of the rules.

The CGT changes were very much as expected. In particular the proposed extension of CGT to non-residents has all the hallmarks of the next step towards a mansion tax. The devil will clearly be in the detail, and that will not be known for some time, but it will be interesting to see how the various reliefs will be prescribed and the tax collection process enforced.

SDLT received barely a mention. Whilst no attempt is being made to shift the burden to the vendor, it is a clear opportunity missed to create a rationale charging structure.

The ‘slab’ basis , distorting sales at the thresholds and failing to reflect the significant changes to property values since they were introduced 16 years ago will continue to need to be taken into account both in agreeing a price and also in allocating the sum agreed to the chattels and not to ‘fixtures’.

Where it was mentioned, it is regrettable that a necessary change, clearly highlighted by the Court of Appeal, to enable Charities partial relief where they acquire a property jointly with others, will not take effect until some-time next summer. The legislation is in many places in need of some serious remedial work.

We anticipated that changes would be made to the Business Premises Renovation Allowance and it is pleasing to note that although changes will be made they are to be ‘measured’ so as to ensure that the relief achieves its objective and not, as was feared, to make it unworkable.

Much was made of the various changes to business rates. These changes will, generally, be most welcome - particular to the small business sector and those shops, pubs and restaurants in properties with a rateable value up to £50,000. Capping the RPI increase generally to 2% is also welcome

This was posted in Bdaily's Members' News section by Baker Tilly .