Emergency Budget 2010 – implications for Landlords and tenants
From Phillip James Letting Agents in Worthing and Brighton & Hove.
So what does the Emergency Budget delivered yesterday mean for landlords and tenants? Here are some of the key points:
Total Government spending on Housing and the Environment for 2010-11 will be £27 billion out of total Government spending this year of £697 billion.
Capital Gains tax for landlords selling property
The Government will reform capital gains tax (CGT) to bring it closer in line with income tax rates.
With effect from 23 June 2010, CGT will rise from 18% to 28% for higher-rate taxpayers only. Basic rate taxpayers will continue to pay an 18% rate on their gains.
With effect from 23 June 2010, the lifetime limit for entrepreneurs relief will be extended from £2,000,000 to £5,000,000.
The Annual Exempt Amount (the amount you can make before CGT is applied) remains at £10,100 for 2010/11 and will continue to rise in line with inflation.
Furnished Holiday Lettings
Proposals from the former Government to impose special tax rules for furnished holiday lettings have been repealed.
The Government will consult this summer on a proposal to ensure the tax rules meet EU requirements in a fiscally responsible way, by changing the eligibility thresholds and restricting the use of loss relief.
Existing rules on furnished holiday lettings will apply until April 2011.
Housing Benefit Reform
In reponse to criticism of the current housing benefit system which has allowed tenants to rent unsuitably large properies from landlords, the Government will make a number of reforms:
From October 2011, Local Housing Allowance rates will be set at the 30th percentile of local rents.
Deductions for non-dependents will be uprated in April 2011 on the basis of prices. This will reverse the freeze in these rates since 2001-02.
From 2013-14, Local Housing Allowance rates will be uprated in line with the Consumer Price Index (CPI).
From April 2013, housing entitlements for working-age people in the social sector will reflect family size.
Housing Benefit awards will be reduced to 90% of the initial award after 12 months for
claimants receiving Jobseekers Allowance. This will be introduced in April 2013.
From April 2011, Housing Benefit claimants with a disability and a non-resident carer will be entitled to funding for an extra bedroom.
From April 2011, Local Housing Allowance Rates will be capped at £250 per week for a one bedroom property, £290 per week for a two bedroom property, £340 per week for a three bedroom property and £400 per week for four bedrooms or more.
The Government contribution to Discretionary Housing Payments will be increased by £10million in 2011-12 and £40 million in each year from 2012- 13.