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Budget 2017: The small-print – Chancellor ‘tidies up’ 3% BTL surcharge loopholes and rent-a-room scheme

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  • 22/11/2017
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Budget 2017: The small-print – Chancellor ‘tidies up’ 3% BTL surcharge loopholes and rent-a-room scheme
Changes to the stamp duty surcharge and plans to overhaul rent-a-room relief were buried in the small print of the Budget - and not mentioned by Philip Hammond in his speech.

The chancellor is cracking down on people who try to avoid the 3% additional stamp duty by making amendments with immediate effect.

The main change will be to stop people disposing of small parts of their main residence to avoid the levy.

It means that people must now dispose their entire main residence to someone who is not their spouse or they will pay the surcharge.

Changes will also help people who are caught out by the surcharge in a divorce case, when buying additional equity in their main property, and in cases where properties are held in trust for children subject to Court of Protection orders.

It means, for example, a landlord who is extending the lease on a main residence will not have to pay the additional surcharge.

Jonathan Evans from Deloitte real estate said the change “tidied up” the 3% surcharge.

He said: “The changes are generally good news and show the Government has listened to people who claimed some areas of the policy were unfair.”

It was also revealed that the Government will review the rent-a-room relief scheme.

Hammond wants to make sure the relief is targeted at longer-term lettings and evidence will look at how the initiative is currently being used.

Under the scheme up to £7,500 a year can be made tax-free from letting out a room in your home.

A consultation on taxing gains made by non-residents on UK  property was also released alongside the Budget.

It means all owners of UK property are likely to pay Capital Gains Tax from April 2019.

 

Olive branch to landlords

And a small olive branch was extended to embattled landlords, the Government announced it would extend mileage rates to people operating a property business.

It was also announced that the Government will launch a £2m competition to support Fintech firms developing solutions that help first‑time buyers ensure their history of meeting rental payments on time is recognised in their credit scores and mortgage applications.

 

 

For all Mortgage Solutions’ Budget coverage on the first-time buyer stamp duty exemption and the boost for small business click on the links.

The government has also launched a fintech competition to make rent history count toward mortgage affordability, changes to rental benefits and the Chancellor’s speech in full.

An extension of Council Tax liabilities for unoccupied homes was announced and the Office for Budget Responsibility and Building Societies Association have criticised the stamp duty cut.

Meanwhile Mortgage Solutions has rounded-up the best of the coverage.

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