New budget announcements – what landlords need to know

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George OsborneGeorge Osborne announced his new budget yesterday with important changes effecting many landlords and tenants.

If you have only been following the budget on mainstream media, some important announcements may have passed under your radar, particularly if you are a landlord. Here are some of the key updates and when they are coming into effect.

 

In April 2016:

Wear and Tear Allowance will be replaced with a new relief that allows residential landlords to deduct the actual costs of replacing furnishings.

Rent-a-Room relief
will be increased from £4,250 to £7,500. More details from HMRC can be found here: https://www.gov.uk/government/publications/rent-a-room-relief-increase.

Housing Benefit family premium will be removed for new claims and new births

Housing Benefit claims will be backdated for a maximum of 4 weeks

Most working-age benefits will be frozen for 4 years. This will apply to Jobseekers’ Allowance; Employment and Support Allowance; Income Support; Child Benefit; applicable amounts for Housing Benefit; and Local Housing Allowance rates, with provision for high rent areas.

 

From April 2017:

Tax relief for landlords will be restricted. This will be phased in over four years. A more detailed explanation from HMRC can be found here: https://www.gov.uk/government/publications/restricting-finance-cost-relief-for-individual-landlords. Landlords will be able to obtain relief as follows:

2017/18: The deduction from property income (as is currently allowed) will be restricted to 75% of finance costs, with the remaining 25% being available as a basic rate tax reduction.

2018/19: 50% finance costs deduction and 50% given as a basic rate tax reduction.

2019-20: 25% finance costs deduction and 75% given as a basic rate tax reduction.

From 2020-21: all financing costs incurred by a landlord will be given as a basic rate tax reduction.

Also from April 2017, those out of work aged 18 to 21 making new claims to Universal Credit will no longer be automatically entitled to the housing element. Parents whose children live with them, vulnerable groups, and those who were living independently and working continuously for the preceding 6 months will be exempt from this measure.

More information about the Summer Budget is available here on the Government’s website: https://www.gov.uk/government/topical-events/budget-july-2015


Posted by Chris Kendall on 9 July 2015

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