Cwmbran-based Green & Co Accountants and Tax Advisors, is urging those purchasing property to check carefully all the details announced as part of a raft of incentives designed to shake the economy back into life following the effects of Covid-19.
Announced on Wednesday 08 July, Chancellor Rishi Sunak increased the Stamp Duty threshold from £125,000 to £500,000 in England, with immediate effect until 31 March 2021. However, this does NOT apply to the Land Transaction Tax which is in place in Wales.
Offering clarity to landlords and those purchasing property, Ed Gooderham, Partner at Green & Co, said:
“Whilst these incentives are most welcome at this hugely testing time, as ever, the devil is in the detail. Land Transaction Tax replaced Stamp Duty here in Wales over two years ago, and whilst it is a similar model, the bands are very different, and the tax is collected by the devolved Welsh Government and not by Westminster.
“We are waiting to hear from the Welsh Government to see if a similar benefit is going to be introduced here, but Wednesday’s announcement does not apply to properties in Wales. Neither does it apply to a property that is not the owner’s main residence, so landlords and investors will still have to pay the existing relevant rates.”
The impact of COVID-19 is hugely significant and those with properties in the private rented sector are being advised to ensure they well informed of any changes in the relevant legislation, should they wish to reduce their portfolios.
“This is a hugely testing time for all, and many landlords, experiencing non-payment due to the knock-on effect of tenants’ loss of earnings, may be considering exiting the market. Before considering selling any of their properties, landlords should please bear in mind that changes to Capital Gains Tax mean any liability is now due 30 days from completion. This is a hugely significant factor, and many are not yet aware of this change in the rules.”
With the support provided through the furlough scheme gradually decreasing over the coming months, the government foresee unemployment rates growing and the main priority on the agenda is how the Chancellor will seek to protect, support and create jobs.
With this in mind, the Government announced a £1,000 Job Retention bonus for businesses who retain furloughed staff until at least January 2021, with each employee having to earn a minimum of £520 per month to qualify.
Mr Gooderham warned those who employ personnel to be aware of the caveats of bringing staff back from furlough:
“The bonus of £1,000 per employee is likely to be paid following the January 2021 payroll, and whilst this is a positive contribution, it should not be relied on. Business owners need to speak to their advisors now so they can plan ahead of employees returning from furlough to the benefit of all concerned.”
In summary, Mr Gooderham continued:
“These are positive announcements and very much welcome at a time when significant help is needed across all sectors. However, we advise any landlord to seriously scrutinise their plans and speak to their professional advisors to ensure they are aware of all the key legislation. We are happy to speak to any landlord who needs help and clarity at this time.”
Green & Co Accountants and Tax Advisors specialise in business growth and tax minimisation for businesses across Wales and the South West of England.
Please note: This article is a commentary on general principles and should not be interpreted as advice for your specific situation.