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Landlord profits squeezed again in Budget 2016

16 March 2016

George Osbourne Budget 2016 Profit Landlord Tax SqueezeChancellor George Osborne is continuing to squeeze the profits of landlords by excluding them from cuts in capital gains tax in Budget 2016.

In a surprise move, the rates of CGT were slashed for entrepreneurs and investors – but maintained at their current rates for buy to let landlords.

The measure was the latest in what seems a series of deliberate tax attacks against landlords by Osborne.

First came phasing out mortgage interest relief for higher rate tax payers, then a 3% surcharge on stamp duty for investors buying second homes or homes to rent out.

Now, everyone else pays CGT at a top rate of 20% and a lower rate of 10% except investors selling
homes who continue to pay at 28% or 18%.

Next commercial property investors will pay extra stamp duty from March 17, 2016 on properties worth more than £1.05 million.

The rules will align with stamp duty calculations for residential property from April this year.
Instead of paying tax on the property value, the amount will apply to the value in rate bands.

Properties worth up to £150,000 are zero-rated, but those valued at between £150,000 and £250,000 have a rate of 2% and for over £250,000, the rate is 5%.

Buying a commercial property valued at £275,000 gives stamp duty of £3,250.

Osborne also confirmed the rise in residential stamp duty will apply to all landlords. Earlier consultations suggested landlords with several properties may have been exempted, but this is no longer the case.

Landlords do win a cut in income tax as personal allowances rise from £11,000 to £11,500 in April 2017.

The level when 40% income tax starts also increases from £42,385 to £45,000 in April 2017 and is due to reach £50,000 by 2019-20.

Insurance Premium Tax (IPT) on landlord, buildings and motor insurances is up 0.5%. The extra £700 million raised will finance additional flood defences.