United Kingdom
March 2010
Alistair Darling's third Budget and his final one before the forthcoming general election was never going to allow him an opportunity to provide many pleasant surprises to taxpayers. With a backdrop of the deepest recession since the 1940's, borrowing at its highest level in Britain's peacetime history and public finances in a parlous state the Chancellor's room for manoeuvre was woefully limited.
The fragility of the economic recovery coupled with the proximity of the political hustings also meant that any significant policy initiatives vis-à-vis raising taxes in order to reduce Net Public Sector Borrowing were firmly "off agenda". In relation to the real estate sector the Budget was a rather bitter-sweet affair, the measures that were particularly welcome were:
- An SDLT exemption for first time buyers of residential property to a value of £250,000;
- An extension of the definition of property income distribution for REITs to include stock dividends;
- An increase in the amount of the Annual Investment Allowance in respect of plant and machinery from £50,000 to £100,000;
- An extension of the categories of plant for which 100 per cent first year allowances are available.
Other less welcome developments were:
- An increase in the rate of SDLT on residential property purchases exceeding £1m to 5 per cent from 6 April 2011;
- Blocking of the use of partnerships in order to mitigate a liability to SDLT.
Rather soberingly, Parliament will be dissolved in the coming fortnight. Any incoming administration (of whatever hue) will introduce measures to either supplement those announced today, or might feel minded to take a wholly different tack. It will, therefore, be interesting to see how many of the provisions announced today endure and actually find their way onto the Statute Book in their intended form.
For more information, click on the following links:
Stamp Duty Land Tax – the "Robin Hood" effect on residential property
Stamp Duty Land Tax and partnerships
The REIT regime – more flexibility
Capital allowances – mostly good news
And there's a little bit more!
Rates – a recap
We trust that you will find our commentary interesting. For further information please do not hesitate to contact either your usual BDO adviser or Solly Benaim