Danielle Ford, Partner and Head of Tax Disputes & Resolutions, penned an article in the Property Reporter Magazine on HMRC’s property sector. For individuals who operate in this industry, Danielle’s latest insight is a must read.
Click the link below to read the article in full.
The property industry has long been a key focus for HMRC, from restricting mortgage interest relief for individuals, abolishing favourable tax treatment for furnished holiday lettings, to tackling tax avoidance schemes. Recent tax reforms and a strong focus on enforcing compliance mean that HMRC will likely keep the property industry in its sights for the foreseeable future.
What are the legislative changes?
The Government’s 2024 Autumn Budget made several changes to the tax regime for property, all of which are intended to bring in more tax revenue.
Stamp Duty charges were increased with the threshold for relief for first-time buyers decreasing from £425k to £300k, taking effect from April 2025.
It also applied a new 2% rate for residential property purchases between £125,001 and £250,000, introducing an additional charge of circa £2,500. Further, the rate of Stamp Duty for those purchasing additional residential properties was increased from 3% to 5%.
The Budget also abolished the separate tax treatment for furnished holiday lettings (FHL), taking effect from April 2025. This has removed FHL’s tax benefits, including exemptions from finance cost restriction rules, capital allowances reductions and inclusion for income as net relevant earnings for pension relief.
Anti-forestalling provisions were introduced from 6 March 2024 to prevent a tax advantage being obtained through the use of conditional contracts.
