Kwarteng Cuts Tax but Could Do Better for Landlords
Chancellor KK has unveiled a raft of tax cuts aimed at helping families and businesses cope with the financial pain of rising energy costs and the cost of living crisis.
Although some of the measures announced in Kwasi Kwarteng’s mini-Budget mean landlords will pay less tax, the hoped-for scrapping of the so-called Section 24 mortgage interest relief failed to materialise.
However, the tax package aids corporate and individual landlords.
Kwarteng’s cuts at a glance
Here are the main points of the Chancellor’s speech:
- Cutting the basic income tax rate by 1p to 19 per cent in April - a year earlier than announced by former chancellor Rishi Sunak - giving more than three million taxpayers an average of £170 a year more in their pockets.
- A proposed corporation tax rise is cancelled, leaving the rate at 19 per cent.
- Slashing stamp duty in England is intended to whip up the property market.
The nil rate band is doubled from £125,000 to £250,000, saving an average homebuyer £2,500 on buying a home. The measure is not limited to first-time buyers, so homebuyers on all levels of the property ladder can take advantage of the deal.
- The Chancellor also abolished the 45 per cent tax rating, leaving the basic rate of 19 per cent from April alongside the 40 per cent higher rate.
Growth is a priority
Kwarteng said: “Economic growth isn’t some academic term with no connection to the real world. It means more jobs, higher pay and more money to fund public services, like schools and the NHS.
“This will not happen overnight, but the tax cuts and reforms I’ve announced today – the biggest package in generations – send a clear signal that growth is our priority.
“Cuts to stamp duty will get the housing market moving and support first-time buyers to put down roots. New Investment Zones will bring business investment and release land for new homes in communities across the country. And we’re accelerating new road, rail and energy projects by removing restrictions that have slowed down progress for too long.
“We want businesses to invest in the UK, we want the brightest and the best to work here and we want better living standards for everyone.”
Stamp duty yo-yo
Labour’s shadow chancellor Rachel Reeves complained that stamp duty cuts had been tried before.
The last time the government did it, a third of people who benefited were buying a second or third home or buy-to-let property – is that the best use of taxpayers’ money when debt is already so high?
“Instead of stamp duty going up like a yo-yo we need to get building, target support at first-time buyers and tackle the issue of homes being sold overseas.”
Before the sudden mini-Budget, property professionals had heard whispers that tax measures many feel are punitive to landlords would be axed, but this did not turn out to be the case.
Section 24 refers to Section 24 of the Finance Act 2015, which disallows mortgage interest relief and other finance costs as a business expense for non-corporate property businesses and offers a 20 per cent tax credit.
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