Birchwood Investment Management is warning buy-to-let investors that they could face higher taxes and more scrutiny in future following the Autumn Statement.
The message from the Hertfordshire-based firm of independent financial advisers comes following the Chancellor’s latest Autumn Statement in which he revealed a number of policies that could affect the property investment sector.
One of the biggest changes will be to the amount of stamp duty land tax charged on buy-to-let properties and second homes. From April 2016 a stamp duty surcharge of 3 per cent will be added to properties purchased for these purposes.
This blow comes after the changes to mortgage interest tax relief announced in the summer Budget, which will see landlords pay considerably more tax on the mortgage interest payments by 2020.
George Osborne also announced that capital gains tax (CGT) due on the sale of second homes or buy-to-let properties must be paid within 30 days from 2019 to improve compliance. This is a significant departure from the current rules, where CGT on additional homes is typically paid within 10 to 22 months.
Trevor Simms, Managing Director at Birchwood Investment Management, said: “It seems that the tide on buy-to-let investments has turned and now the government is cracking down on the sector in a significant way.
“In the last few years this industry has seen some of the strongest investment returns and this news will leave many pondering about the future of their investments plan.
“Those who had hoped to make use of the market later in life, but who are now put off by the changes announced in the Autumn Statement should contact a professional adviser to put alternative plans in place.”
The Autumn Statement also included changes that will set the level of the new state pension at £155.65 a week for those who have made full contributions. The basic state pension will also increase by £3.35 next year to £119.30 a week.
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