Autumn Budget 2021 and how it affects landlords

Updated: Dec 2, 2021

The autumn Budget, the first since Covid-19 restrictions were lifted in July, focused on the country’s ‘solid economic recovery’ post-pandemic. This summary from Simply Business explains everything you need to know as a landlord.

Alongside a National Insurance hike and a fuel duty freeze, Chancellor Rishi Sunak announced several measures which look set to impact landlords. Read on to find out more details about how the Autumn Budget 2021 could affect you.

As part of the government’s Heat and Buildings Strategy, which was announced in early October, landlords will be able to access grants of £5,000 to replace gas boilers with heat pumps from April 2022.

Replacing gas central heating systems, which are used in 85 per cent of rental properties, with heat pumps is part of the government’s plan to achieve net zero carbon emissions by 2050.

Gas boilers will no longer be sold after 2035 and it’s estimated that an air source heat pump costs between £6,000 and £18,000, depending on its size.

To complement the Heat and Buildings Strategy, the Budget and Spending Review has pledged:

  • £3.9 billion to make buildings in England and Wales warmer and cheaper to heat

  • £450 million to grow the heat pump market in England and Wales, with the aim of reducing the cost of heat pumps by 25-50 per cent by 2025

Capital gains tax deadline extended

Despite long-term speculation that the Chancellor would use the Budget to increase capital gains tax, reform again failed to materialise.

However, it was revealed that the deadline for residents to report and pay capital gains tax after selling UK residential property will be increased from 30 days to 60 days from 27 October 2021.

The Treasury says the extended payment window will give taxpayers ’sufficient time’ to report and pay capital gains tax.

Why could capital gains tax be increased in the future?

In 2020 Rishi Sunak asked the Office for Tax Simplification (OTS) for a report on capital gains tax.

The report estimated that the Treasury could raise an extra £14 billion by cutting capital gains tax exemptions and doubling rates.

Earlier this year the OTS published the second part of its report, which recommended doubling the payment window for people to pay the tax, which has now been actioned.

One of the reasons there’s been speculation about a rise in capital gains tax is that it brings in a lot of revenue for the Treasury. According to the latest HMRC figures, capital gains tax receipts increased from £7.1 billion in 2015/16 to £11.5 billion in 2020/21 – a rise of 62 per cent.

The Chancellor’s decision not to make widespread capital gains tax changes as part of this Budget means landlords selling properties in the coming months won’t have to pay more tax.

However, a future tax increase remains likely, as it was Sunak himself who first asked for recommendations about how capital gains tax could be reformed.

Landlords to benefit from £65 million Covid-19 debt fund

Although not announced as part of the Budget, the Department for Levelling Up, Housing and Communities recently launched a £65 million fund to help tenants in rent arrears caused by Covid-19.

The scheme will be operated by local authorities in England and aims to help:

  • 950,000 low-income households in rent arrears

  • 1.4 million who are behind on council tax bills

  • 1.4 million who are behind on electricity and gas bills

Following the end of the furlough scheme and the lifting of the eviction ban, the debt fund has been welcomed as an opportunity to reduce homelessness.

However, some industry commentators say that £65 million isn’t enough. Chris Norris, Policy Director at the National Residential Landlords Association, suggested that rent arrears caused by Covid-19 are closer to £300 million.

“With warnings that rent debts could pose a risk to the economic recovery and the government admitting that many landlords are highly vulnerable to arrears, the Chancellor must go further,” he said.

No details on Green Homes Grant replacement

Due to the government’s increased focus on sustainability and the UK hosting the UN climate change conference (COP26) in Glasgow next month, there was speculation that a reboot of the Green Homes Grant would be included in the Budget.

The Green Homes Grant was announced in 2020, with the aim of improving the energy efficiency of thousands of homes (including rental properties) across the country by offering vouchers to help homeowners and landlords pay for any renovation.

However, the scheme was scrapped in March due to a range of issues, including delays in processing applications, and the fact that vouchers only covered two-thirds of renovation costs.

The government has since launched the Heat and Buildings Strategy, which includes £5,000 grants for heat pumps (explained above).

A roundup of other Autumn Budget 2021 announcements for landlords

Here’s an overview of some of the other spending pledges made by the Chancellor that could impact landlords.

Housing investment to total £24 billion

It’s estimated that investment in housing and housing-related activity will total £24 billion, including £11.5 billion towards affordable homes.

Brownfield regeneration

The government has pledged an extra £1.8 billion to help deliver up to 160,000 new homes on brownfield land.

More money for cladding removal

The government has committed an extra £5 billion to remove unsafe cladding from highest risk buildings.

A tax on residential property developers

A new tax will target property developers with profits over £25 million at a rate of four per cent to fund issues such as removing unsafe cladding.

Support for lowest-paid tenants

A new £2 billion fund is estimated to be worth an average of £1,000 a year for families claiming Universal Credit, many of whom will be tenants. Starting from December, the amount the government claws back from workers who claim Universal Credit will drop from 63p to 55p for every £1 they earn.

Making Tax Digital delayed until 2024

As announced prior to the Budget, landlords with income over £10,000 a year will have an extra year to prepare for Making Tax Digital. The new rules for income tax Self Assessment will now be introduced on 6 April 2024.

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