I am very lucky, I really quite like how I spend my days – I’m a geek! Aside from the numbers and the ever changing tax landscape I even enjoy the political nature of tax. Fortunately for me then we have had 4 – yep 4 – “Budgets” in the last 12 months. I am probably cheating here as I am counting the Chancellor’s 2014 Autumn Statement which was in December 2014 as well as the two actual Budgets this year, but none the less I have spent a lot of time listening to the Chancellor these last 12 months. And none more than last Wednesday. Rarely has someone said so much that contained so little. He spoke for an hour and change, with most commentators seemingly failing to get too excited about the continual list of numbers reeled off at bullet speed. However there is one advantage to such an empty speech delivered more for its political impact than its substance, and that is that anything of substance is easy to pick out. In the world of tax, almost inevitably the most important changes are those affecting residential property buyers and sellers. Those that are involved in property investment in all its guises may well feel that they have been battered enough over recent years. First came the penal rate of SDLT for companies acquiring high value property which was soon followed by ATED and ATED CGT. The changing of the CGT rules was next, bringing within the charge to UK CGT disposals of UK residential property by non-residents. A little respite was given in the long lobbied for change in how SDLT is calculated, before the industry was attacked again by the announced restriction in interest relief and the abolition of wear and tear allowance. We are also awaiting the change of UK IHT Law which will bring within that charge non-UK structures holding UK residential property. You would think that was enough – the Chancellor disagrees. Instead he seems to follow the mantra that when they are going down just keep hitting them. The thing is, if he hits too hard he will destroy the industry which will almost certainly negatively effect the amount of money he and his friends in Government get to play with. The two Autumn Statement changes are very easy to explain. The first is that where you buy either a second home or a buy-to-let after 31 March 2016, you will pay an additional 3% of the purchase price in SDLT (with a potential carve out that is to be consulted on for large corporate property investors (or funds) with the number of properties required floated as 15 or more). The second, is that when you make a chargeable gain on the disposal of a residential property after 6 April 2019 you will have to pay the tax within 30 days of the disposal. To me, 3% seems like just enough to make political headlines without going too far and damaging the UK property market that so many rely on for their financial security. Moreover, SDLT is a tax that everyone hates, so it works well in the public domain by putting a higher liability on those that are perceived to be able to afford it and, in my view, will do nothing to slow down the property industry at all. In fact in the short term it will likely accelerate the property market as people try and complete deals before April 2016, but in the longer term it is unlikely to do enough damage to harm financial projections and prevent acquisitions. I am sure that conveyancers will be even more happy than the Government as a result of the announced changes! The 30 day payment window could be a real nasty however. In most cases the funds will be available following the sale of the property as the cash will follow the sale on the same day. However that is not always the case. For example if a father gifts a rental property to his daughter the transaction is deemed to occur at market value and any gain is chargeable to tax. As the transaction was a gift no cash will have changed hands and the father will need to pay the tax out of his own pocket. This is problematic at the moment but he will normally have at least 10 months to find the cash to pay the tax. Under the new regime he will need to find the cash within 30 days. This may well prove difficult. The impact of these changes does not stop at politics. From a commercial point of view there is also the fear that whilst the property market will continue to climb even further out of the stratosphere, particularly in the South East, to fund the additional tax charges to property developers from SDLT, the withdrawal of the higher rate tax relief for interest deductions and the much loved wear and tear allowance, rents will have to increase. As it is our understanding that one of the Government’s principle policy objectives is to increase affordable housing, these changes seem to be at odds with each other. In any event, with all of the changes that have either taken effect already or will be implemented over the coming years, it has never been more important to ensure that when looking at starting or indeed growing a UK property rental business that the figures are looked at very closely, and of course, we can help with that. Thomas Adcock Tax Partner d: +44 (0)20 7309 3856 click to email For more information please contact Tom directly using the details above or please contact us.