The final Spring Budget (budgets return to Autumn from later this year) held no major surprises for the Real Estate Sector.
A copy of the detailed Budget can be found here, and a copy of the BPF response can be found here. Some highlights are below.
Inflation has returned to 'business as usual'. Having being outside the targeted 1-3% band from November 2014 to September 2016, CPI currently stands at 1.8% and is predicted to peak at 2.4% this year before settling at 2.0% in 2019-2021. RPI stands at 2.6%. This will be of interest to those with index-linked rent reviews in place.
Business rates
The planned business rates revaluations will go ahead, with significant impact on certain parts of the sector, though the Chancellor stated that the overall revaluation is cost neutral.
A further £435m of rates relief was announced for:
- Small businesses facing large increases (£600 or more)
- Pubs with a rateable value of up to £100k, which will receive a £1,000 discount (subject to state aid limits)
- Local Authorities, which will receive funding of £300m over four years to support businesses on a discretionary basis.
Property Taxes
- The SDLT payment window will be reduced from 30 days to 14 days, but that will happen now in the 2018-19 tax year, not 2017-18 as initially announced.
- Legislation will be amended to ensure all profits realised by offshore property developers from developments in the UK are subject to tax. The specifics of this were not set out in the budget, except that it will take effect retrospectively from 8 March 2017.
- A consultation was announced on amending tax relief on taking in lodgers so that it encourages longer-term letting. No specific policy proposals were announced.
Tax Administration
- There was a continuing focus on tax avoidance and promoters of such schemes.
- A consultation was announced on how to combat missing trader VAT fraud in the construction sector.
- The mandatory move to Making Tax Digital (keeping digital records and sending quarterly updates to HMRC) for landlords and unincorporated businesses below the VAT threshold has been delayed by a year, from April 2018 to April 2019.
Infrastructure
- An additional £216m was pledged toward school building maintenance.
- Details of how the National Productivity Investment Fund will invest the £23bn it was given at the Autumn Statement 2016 were announced, including:
- A 5G Mobile Network trial and £600m going towards full-fibre broadband projects
- A new £690m fund made available to Local Authorities to invest in local transport, along with a previously announced £1.1bn fund for general transport investment
- £220m for road bottleneck investment, of which £90m will go towards the North and £23m to the Midlands.
Corporation Tax
The Chancellor confirmed the planned cuts to corporation tax are going ahead, thus the rate reduces from 20% to 19% from 1 April 2017 and will be reduced to 17% in 2020.
