The goal of Chancellor Jeremy Hunt’s Autumn Budget 2022 was to “address inflation and maintain low mortgage rates.” Here is what landlords need to know about the new measures, which range from increased help for energy costs to a number of tax adjustments.
To summarise all of the main points from the Autumn Budget 2022 – we have listed them below
- Capital Gains Tax Relief Allowance Will Be Halved
- Income, National Insurance, And Inheritance Tax Allowance Thresholds Frozen Until 2028
- Stamp Duty Cut Will Stay In Place Until 2025
- Dividend Allowance Will Be Cut From 2023
- Threshold For Top Rate Of Income Tax Cut
- 7% Cap On Social Housing Rent Rises Confirmed
- The National Living Wage Will Increase
- Energy Price Guarantee Extended For A Further 12 Months
Stamp Duty Cut Will Stay In Place Until 2025
The reductions in stamp duty that were promised in the September mini-Budget will stop on March 31, 2025.
Any person planning to purchase a property may wish to take advantage of the discounts while they can because the reductions in stamp duty can save purchasers up to £6,250.
One of Kwasi Kwarteng’s popular initiatives when he established his mini-Budget, aiming to assist almost 200,000 homeowners, was the reduction in Stamp Duty Land Tax.
However, Jeremy Hunt has now explained that at this time, the SDLT will only be temporarily reduced. To assist the housing industry and the hundreds of thousands of jobs and companies that depend on it, the SDLT decrease will continue until 31 March 2025.
Capital Gains Tax Relief Allowance Will Be Halved
- For the tax year 2023 to 2024 the annual exempt amount (AEA) will be £6,000 for individuals and personal representatives, and £3,000 for most trustees.
- For the tax year 2024 to 2025 and subsequent tax years the AEA will be permanently fixed at £3,000 for individuals and personal representatives, and £1,500 for most trustees.
- The measure also fixes the CGT proceeds reporting limit at £50,000.
Income, National Insurance, And Inheritance Tax Thresholds Frozen Until 2028
The existing allowance threshold for income tax and national insurance tax has been frozen. This will result in more people moving into higher tax brackets when incomes rise in accordance with inflation even while the tax bands remain the same.
Additionally, inheritance tax will remain at its present level of £325,000.
Because of the expansion, more estates will probably be subject to inheritance tax because of growing home values and soaring inflation.
Dividend Allowance To Be Cut From 2023
The tax-free dividend income allowance will be cut in April (often known as the “dividend allowance”). This means those who receive dividend income will see a decrease to the allowance from £2,000 to £1,000 as of 6 April 2023 and subsequently to £500 as of 6 April 2024.
This will have an impact on all landlords who use limited company structures in order to distribute dividends to themselves and other shareholders.
Threshold For Top Rate Of Income Tax Cut
High earning landlords will begin to pay the 45% top rate of income tax, as the threshold will be brought down from £150,000 to £125,140. This means that those earning £150,000 or more will pay just over £1,200 more a year in tax.
7% Cap On Social Housing Rent Rises Confirmed
The government has announced that it will not allow rent rises in social housing to exceed 7%.The policy will help individuals most exposed to rising inflation, the chancellor stated in his statement.
The government had earlier stated that it would prefer a ceiling of 5%, but it has since confirmed a higher cap of 7%.
The UK National Living Wage Will Increase In April
From April 1, 2023, the National Living Wage will increase by 92 pence, or 9.7%, to £10.42. The NLW will continue to be on pace to meet the Government’s aim of two-thirds of median wages by 2024 according to the Low Pay Commission’s (LPC) recommendations.
This should also give any tenants currently receiving minimum wage a little more financial certainty.
Energy Price Guarantee Extended For Additional 12 Months
By capping the amount providers can charge per utilised unit of energy, the Energy Price Guarantee shields consumers from rises in energy prices.
It caps the annual equivalent of the average expense for a typical British household at about £2,500. Based on what energy prices would have been under the price cap, a typical British home will save almost £900 this winter as a result of the Energy Price Guarantee (1 October 2022 to 31 March 2023)
The energy price guarantee will continue for another 12 months starting in April 2023, although the typical household’s annual cost will increase to £3,000, providing an average of £500 in support for every household in the nation.
The chancellor will also introduce additional cost of living payments next year:
- £900 to households on means tested benefits
- £300 for pensioner households
- £150 for those on disability benefits
- £1 billion of funding for the household support fund, extending the support for a further 12 months
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