2010 Budget Implications for UK property

The UK government today announced their 2010 emergency budget to the house of commons and it makes significant changes to the taxation concerning income and capital gains from property.

The Headlines:
– Income tax threshold raised by £1000 to £7475
– UK Economy growth forecasts reduced to 1.2 percent this year and 2.3% in 2011
– Capital Gains tax raised from 18% to 28% for higher rate income tax payers from midnight tonight
– Capital Gains Tax remains at 18% for low and middle-income savers
– Council Tax frozen for 12 months from April 2011
– Corporation tax to be cut progressively over the next few years
– VAT to rise from 17.5% to 20% from January2011

The rise in Capital Gains Tax (CGT) was expected by most to rise to the same level as income tax (40% for higher rate) – so this announcement will not come as a shock but maybe some small relief to those expecting a greater hike. Lower income bracket earners wil be relieved that the tax payable on the sale of property (other than a principle dwelling) will remain at 18%

Private landlords will also, no doubt, be calculating the impact on the rental sector that the changes to income tax and housing allowance may produce.

The effect on inflation, trade and unemployment will also have a bearing on inflation, affordability and access to finance – all of which will have a bearing on house prices over the next two years.

Have your say, leave your comments below.

Sources: BBC, Reuters, Sky News