Autumn statement 2015: Private client summary

Stamp duty

There will be a three per cent increase in stamp duty for properties purchased as a second home or through buy-to-let.

'Frankly, people buying a home to let should not be squeezing out families who can't afford a home to buy,' Osborne told the Commons.

The change will come into effect in April 2016 and is expected to 'raise almost £1bn by 2021'. The government will consult on ways to make sure corporate property development is not effected.

The move has not been well received by the managing director of the Association of Residential Lettings Agents, David Cox, who believes the change will ultimately punish rent payers.

'[This] is catastrophic news for the private rental sector, especially following the recent changes to mortgage interest tax relief and the annual wear and tear allowance,' he said.

'Increasing tax for landlords will increase rents and reduce property standards for tenants.'

Meanwhile, James Ward, partner and head of private client at law firm, Seddons, thinks it will harm families' ability to diversify their investment portfolio.

He commented: This is clearly another direct hit at families looking to diversify their assets into property and supplement their income.

'It will undoubtedly have an impact on the property market in London, which is still reeling from the stamp duty changes last year. We are also likely to see a stampede of transactions before the changes come into effect in April 2016.'

Tax evasion

The General Anti-Abuse Rule (GAAR) will be strengthened by a new penalty equal to 60 per cent of the tax due, if the disputed tax falls under the GAAR parameters.

'Today we go further with new penalties for the General Anti-Abuse Rule we introduced, action on disguised remuneration schemes and stamp duty avoidance, and we will stop abuse of the intangible fixed assets regime and capital allowances,' Osborne commented.

'We will also exclude energy generation from the venture capital schemes, to ensure that they remain well targeted at higher risk companies.'

Richard Morley, a partner at accountancy firm, BDO, thinks Osborne's hand has been forced by serial avoiders who have made the treasury to rack up excessive court fees.

'It was no secret that the government wanted to introduce a penalty aimed predominantly at serial abusers of tax avoidance schemes which consistently fail before the courts.'

'The penalty will be a way to claw back some of the money spent pursuing the serial avoiders. It has also been announced that there will be small changes made to the GAAR's procedure to improve its ability to tackle marketed avoidance schemes.'

The chancellor has also that announced £800m will be invested in the 'fight against tax evasion', which he said represents an 'investment with a return of almost ten times in additional tax collected.'

A large part of this will go towards improving HMRC's digital systems so that paper and administration costs are reduced.

The strategy will mean that tax is collected far more speedily, increasing the treasuries tax collection figures - tax on capital gains arising from the sale of residential property will have to be within a 30-day window from 2019.

This move is yet another swipe at buy-to-let owners, James Ward said.

'The proposed 30-day payment window from 2019 mirrors the current position for the payment of capital gains tax by non-residents, and will no doubt help the government's cash flow. Many will see it as yet another swipe at buy-to-let owners, who in the past have been able to use the delay in payment to their financial advantage.'

Housing

The government's housing budget will be increased to £2bn per year and is expected to deliver 400,000 new homes by 2030.

Almost half of these will be sold at 20 per cent off market value the chancellor said, while 135,000 of them form part of a new scheme, Help to Buy: Shared Ownership. Homes bought under this scheme will be subject to fewer restrictions which are exclusive to shared ownership homes, such as 'who can buy them, who can build them and who they can be sold on to.'

Britain's capital is to receive its own housing scheme designed to help first-time buyers get onto the property in London.

'The government will help address the housing crisis in our capital city with a new scheme - London Help to Buy', Osborne announced.

'Londoners with a 5 per cent deposit will be able to get an interest-free loan worth up to 40 per cent of the value of a newly-built home.

Osborne also delivered on a manifesto commitment to extend right to buy to housing associations. Tenants of five housing associations will be able to buy their homes under a pilot scheme.

Suzanne Gill, partner in the commercial property and planning team at Wedlake Bell, says that although the schemes and investment into housing are welcome, more needs to be done to improve the 'unpredictable' planning process that currently exists.

She commented: 'More needs to be done on the supply side to have any real impact on the housing crisis. Specifically, the planning process remains cumbersome, costly and unpredictable. I hope that government cuts don't affect stretched planning departments even more.

'Measures such as releasing government land have been mooted before. It will test Greg Clarke's political mettle to drive them through. Unless more homes of all sizes are built, the affordability crisis will continue. This is a live problem for businesses in London and the South East. Too many good staff leave to seek decent homes elsewhere.'

Binyamin Ali is editor of Private Client Adviser

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