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UK Property Investment and the Emergency Budget

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Capital Gains Tax  Emergency Budget  UK Property Investment  VAT  Euro Steam Roller  George Osbourne 

UK Property Investment and the Emergency Budget

By - Tuesday 22 June 2010

After having sat through George Osbournes Emergency Budget speech with the sound of harrumphing akin only to the deafening drone of vuvuzelas at a world cup game, we bring you as promised, the low down on the UK economy as it affects property investors after the Coalition Governments Budget.


VAT will rise from the current 17.5% to 20% from January 4th 2011.

Bank Levy

Actual figures have not been disclosed at this point, although the government expects to raise 2 billion a year through making banks take responsibility for their actions.

Capital Gains Tax

Basic rate income tax earners will have CGT stay the same. Higher rate tax payers will see CGT rise to 28% (A rise of 10% for the higher earners as of midnight tonight).

Corporation Tax

Corporation tax will be reduced by 1% per year from the current 28% to 24% over the next 4 years.

Capital Gains Tax on Entrepreneurs

Currently entrepreneurs have a relief set at 10% only on the first 2 million over the lifetime. This is being extended to 5 million.

Housing Benefit

Housing Benefit will be capped, saving the Government some 1.8 billion.

Green Investment Bank

This is apparently going to be accelerated, although no figures were disclosed in the speech. It would lead to suggest thought that there will be further incentives out there for "green" style investments at the higher levels.

Euro Preparation Unit

The Treasury Euro Preparation Unit is to be abolished.

What does it all mean for property investors?

Well, like most budgets there are pros and cons. Owners of Buy to Let properties in the lower tax bracket can stop panicking if they want to sell a property now. Higher tax earners are undoubtedly breathing a sigh of relief that CGT has not been hiked up to 40% or 50% as widely predicted by the press.

The rise in VAT won't kick in until next year, so no immediate peril there, but interestingly, the changes for small business and corporations in general make forming a company to place your assets into more attractive than ever, as we alluded to in our initial coverage concerning CGT and the initial budget by the coalition Government.

The capping of Housing Benefit will mean that there are no easy rent rises for low rent Buy to Let owners, however, forming a company would likely offset that.

The abolition of the Euro Preparation Unit will no doubt save a chunk of change for the Government. Provided the budget outlined today does go according to plan, there really should be no need for it. If however, it does fall apart at the seams, then in the worst case scenario we could see a rather large euro steam roller trundling towards the UK at a rate of knots if Sterling takes a dive against the Euro for some reason.

Finally, cider drinkers out there can sit back and take solace in knowing that the proposed 10% tax increase on the tasty beverage has been scrapped.

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*This page is provided for information purposes only and should not be construed as offering advice. IPIN is not licensed to give financial advice and all information provided by IPIN regarding real estate should never be treated as specific advice or regulations. This is standard practice with property investment companies as the purchase of property as an investment is not regulated by the UK or other Financial Services Authorities.

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