MHA | No rabbits, no hat for the construction industry

No rabbits, no hat for the construction industry

Brendan Sharkey · March 11th 2024 · read

Two Cranes

Maybe there was too much logic to think that the Chancellor would address the housing market in his Spring Budget.

Housing, along with Education and Health are primary needs. Unfortunately, unlike the latter two, Housing provision is not under the control of government and it needs a stimulus. The development of more affordable and energy efficient housing should be a point of policy, particularly given the current status, which is clearly recognised by Michael Gove.

Reforms to SDLT by increasing the nil rate band to help first time buyers, making the duty payable by the seller and not the buyer, incentivising downsizers would have increased the volume of transactions but not diluted the Exchequers tax take. The withdrawal of SDLT relief for multi-dwelling purchases may reduce tax avoidance but will not change the housing provision.

The reduction in CGT following the sale of residential properties from 28% to 24% recognises that this will increase the volume of transactions. So why not 20% which is the standard rate?

What is so wrong in giving tax relief for energy efficient improvements to the landlords rather than criticise for poor quality housing?

Furnished Holiday Lettings

Abolishing this regime has potentially far-reaching consequences. Many individuals have built up businesses supplying fully serviced accommodation that are treated as businesses. Not only is tax relief available on interest, but the businesses qualify on disposal for Business Asset Disposal Relief where the first £1mn gain is taxed at 10%. If this is retrospective taxing it will upset many.

Holiday letting brings income into communities, second homes used for family recreation do not. Are we to assume that holidays abroad are the future where we support other economies?  Why not have a wealth tax on second homes bringing income into communities?

For further guidance

For further guidance on any of the tax measures discussed in this article, please contact your usual MHA advisor or Contact Us.

Read the latest Spring Budget commentary from MHA – visit our dedicated hub for resources, advice and practical guidance on what the new tax measures could mean for you.

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