Irwin Mitchell Comments On Key Announcements

The Chancellor George Osborne announced a mixed bag of initiatives for the property industry in today’s Budget, according to law firm Irwin Mitchell.

On the positive side, he doubled the capital allowances annual investment allowance to £500,000 which “ is a generous increase” given that the allowance was only £25,000 a couple of years ago. It is believed this will go some way to alleviating the financial pressures felt by property investors. He also extended the period in which enhanced capital allowances are available in enterprise zones by 3 years until 31 March 2020.

And in another measure designed to boost house building, the Government is to establish a £500m fund to provide loans to developers to unlock housing units, stalled due to difficulty accessing finance. Whilst the detail is still to be revealed,  it is hoped that this will assist many smaller residential developers who have struggled to find funds for developments. The Government is also to introduce a £150m fund to kick start regeneration of social housing estates.

However as Alex Barnes, Tax Partner at Irwin Mitchell points out,  there are some changes that won’t be welcomed by people looking to acquire dwellings or holding dwellings in companies, partnerships or collective investment schemes. These include:

• the extension of the 15% SDLT rate to the acquisition of dwellings over £500,000 (from £2m) bought by “non-natural people”  with effect from 20 March 2014,
• the extension of the annual tax on enveloped dwellings (ATED) regime to catch properties worth over £1m (from £2m) with effect from 1 April 2015 and worth over £500,000 from 1 April 2016, and
• the extension of capital gains tax regime on the disposal of ATED dwellings worth over £1m from 6 April 2015 and worth over £500,000 from 6 April 2016 (from £2m currently).

According to Barnes these will make holding residential property in companies, partnerships and collective investment schemes less attractive for many. He added :