This information should not be interpreted as financial, tax or legal advice. Mortgage and loan rates are subject to change.
Category: government and politics
The Autumn Statement 2023 has been announced by Chancellor Jeremy Hunt, on Wednesday 22nd November. Of the 110 measures put in place in order to “help grow the economy”, which relate to landlords?
Cuts to National Insurance
The primary highlight of today's announcement is the reduction in National Insurance rates from 12 per cent to 10 per cent. This applies to everyone, including landlords.
Significant tax reductions are also extended to the self-employed sector, with Hunt announcing the complete abolition of Class Two National Insurance for the self-employed.
Additionally, Class Four National Insurance will be reduced by one percentage point to 8 per cent, providing a further average annual saving of £350 for approximately two million individuals, starting from April 2024.
Many landlords are self-employed, and cuts to national insurance will put cash back in those landlords' pockets when they come to file their taxes.
Local Housing Allowance rates to rise
In an effort to alleviate the financial burden on low income private renters, Hunt has announced the Local Housing Allowance will be unfrozen, and increased to the first 30 percent of rents nationally.
This will come into effect from April 2024, with approximately 1.6 million households set to receive an average support of £800 in the coming year.
Landlords who rent property to those receiving a local housing allowance, may find that after April, some tenants are more receptive to slight rent adjustments.
Plan for speedy planning applications
The Chancellor has pledged to overhaul the planning system, emphasising a commitment to speed up planning applications.
Under his proposal, local authorities will be allowed to recover the costs associated with major business planning applications. In exchange, they must adhere to specified, accelerated timelines.
According to Hunt, if these timelines are not met, application fees will be automatically refunded, and the processing of the application will be carried out free of charge.
The aim is to create a ‘or your money back’ style guarantee, that pushes the public sector to perform optimally.
This move will benefit any property developers that have to submit planning applications to local authority in order to get their projects off the ground – with a more speedy application process, projects may be able to finish much sooner than expected.
Business tax break now permanent
So called ‘Full expensing’ was a temporary tax break brought about by Sunak to help businesses throughout the pandemic.
Under this initiative, for every £1 invested by a business in IT, machinery, and equipment, they can recover 25p through a reduction in corporation tax.
Hunt announced on Wednesday 22nd November that full expensing will now become permanent. His estimates say this move will incur an annual cost of £11 billion, marking it as the "largest business tax cut in modern British history."
This presents a substantial advantage for businesses with significant equipment investments, particularly in sectors such as manufacturing. However, companies that focus primarily on investing in people may not experience as much benefit.
Business rate relief extended
With the aim to boost business in the UK, Jeremy Hunt is extending discounted business rates.
The 75 per cent discount on business rates, up to a £110,000 discount, for retail, hospitality, and leisure businesses will continue for another year.
Hunt has announced the continuation of the freeze on the small business multiplier for an additional year.
He says:
I have also decided to extend the 75 percent business rates discount for retail, hospitality and leisure businesses for another year too.
This will save the average independent pub over £12,800 next year and at a cost of £4.3billion, it is a large tax cut which recognises the role of pubs and high street shops in our communities.
Who do these measures benefit?
While the measures announced by the Chancellor on Wednesday 22nd November broadly affect landlords in the same way they do the wider population, there are measures which affect landlords indirectly.
Business-owners will benefit from extension of business rate relief, as well as the ability to permanently claim back 25 per cent of capital expenditure.
Property developers will also benefit from the autumn statement measures, as an ‘or your money back’ system hopes to speed up planning application processes.
