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April tax changes on the way for landlords
27 January 2016
Chancellor George Osborne has radically revamped tax in three main areas – buy to let, savings and pensions.
Here is a checklist of the 10 major changes:
• Wear and tear
The 10% wear and tear allowance for furnished buy to lets is axed and a new replacement allowance takes over for all landlords
• Stamp duty surcharge for property investors
Buy to let investors and second home owners in England and Wales face a 3% top-up on stamp duty due on homes worth more than £40,000
• Rent a room relief
Owners and tenants renting to lodgers see rent a room relief soar from £4,250 a year to £7,500 a year
• Flat rate state pension
Anyone reaching the state retirement age receives the single-tier (flat rate) state pension worth £155 a week to all pensioners.
Watch out for qualifying years to pick up the full rate – the old state pension required 30 years of work, but the new flat rate pension has a lower limit of 35 years.
• Tapered pension contribution allowance
The annual amount a retirement saver can pay into a pension is tapered according to earnings between £40,000 and £10,000 a year. Those on £150,000 are restricted to the £10,000 cap
• Lifetime allowance
The pension lifetime allowance is reduced from £1.25 million to £1 million. More about the lifetime allowance
• Offshore pension death benefits revamped
Tax rates on taxable lump sums paid as death benefits from Qualifying Recognised Overseas Pension Schemes (QROPS) are slashed from 45% to the recipient’s marginal rate – bring expat pensions in line with UK rules
• Scottish rate of income tax
The new rate comes into force for anyone living in a Scottish post code
• Tax free personal savings
A new annual personal tax allowance for cash savers outside ISAs
• Dividend allowance for directors and shareholders
Another new annual allowance of £5,000 for anyone trading as or investing in a company
The government has published a list of personal and basic rate limits for income tax for the 2016-2017 and 2017-18 tax years here