There were a number of key considerations for landlords that came of this year’s Spring Budget. This article provides a legislative update in relation to those considerations that we think will be of particular interest to landlords. This also includes a brief reminder of current relevant COVID rules.
Corporation tax
- The main rate of Corporate tax will be raised to 25% from 19% but only from 2023/24 financial year. This is still expected to be the lowest in the G7 and a new 19% small profits rate will be introduced for companies with profits less than £50k.
Capital allowances
- UK companies buying new unused plant and machinery will benefit from a 130% “super deduction” for plant and machinery. This includes spending on construction works and refurbishments and is the first time the Government has offered a payback greater than the original expenditure.
- As a result, the value of capital allowances claims for companies will increase from 19p to c.25p. A demonstration of the fact that the Government is looking to incentivise expenditure on plant and machinery.
- Unfortunately, landlords do not qualify for any of these capital allowances changes. This is only applicable to owner-occupiers and tenants.
Business rates and grants
- There will be 100% business rates relief until 30 June 2021, then a 2/3 rates relief until 21 March 2022. This should take the pressure off occupiers’ cashflow as mothballed parts of the economy get moving again.
- The wider review of online vs bricks and mortar rates has been deferred, although an interim report on 23 March 2021 with final a report in the autumn is expected.
- Up to £6k grants are now available per premises for non-essential retail and up to £18k for hospitality and leisure. This could be key for many landlords with retail tenants that are looking to get back up and running.
Regeneration and infrastructure
- Funding has been confirmed within the Budget for 45 of the 101 areas listed within the Towns Fund, something which landlords should consider in relation to the locations within their property portfolio.
- A £4.8 regeneration fund has also been announced to ‘level up’ locally with high value local infrastructure projects being championed by many local MPs, particularly transport and high street regeneration.
- A £12 billion infrastructure bank has been announced; this is primarily expected to focus on port and green energy.
VAT
- 5% VAT rate on hospitality, holiday accommodation and attractions will continue to apply until 30 September 2021 then a slightly lower than normal 12.5% rate will come into play until 31 March 2022.
Furlough
- The furlough scheme has been extended to 30 September 2021; employers are set to pay a 10% contribution during July and 20% contribution during August and September.
Housing
- The Stamp Duty Land Tax (SDLT) holiday for residential property has been extended for properties up to £500k until 30 June 2021. This reduces to £250k on 1 July 2021 and then back to £125k on 1 October 2021.
- Government-backed first-time buyer mortgages will be available at a 5% deposit on most homes.
Covid rules
- Forfeiture – the bar on forfeiture still applies up to 31 March 2021. It is not yet known whether this will be extended, but the extension in furlough support would suggest that it will. This also applies to CRAR (taking control of goods etc). Note that claims against guarantors may still be possible and claims against rent deposits are not affected.
- Winding up – the bar on winding up still applies up to 31 March June 2021. Again, it seems likely this will be extended.
- Business interruption insurance – the Court’s findings in mid-July mean that claims for ‘no damage’ reasons are now possible. The specific wording of policies will matter but it may be possible to submit a loss of rent claim, quantified and with evidence of loss.