The National Landlord Association (NLA) has issued a report insisting that late additions to the Finance Bill at Committee Stage regarding land tax and capital gains tax will not negatively impact landlords.
The Law Society suggested this week that profits from the sale of buy-to-let property could in future be subject to income tax rather than capital gains tax, under proposed government changes. But the NLA says that the planned amendments to the bill will not have an adverse impact on landlords, "particularly as they were part of the anti-avoidance measures promised in the Budget."
Various new clauses will introduce the legislation announced in the 2016 Budget for a specific charge to income tax or corporation tax on profits from the disposal of land in the UK. The new clauses will ensure that offshore structures cannot be used to avoid UK tax on profits generated from dealing in or developing land in the UK.
However, despite the ambiguous wording, theNLA says that it was 'reassured by the then Chief Secretary to the Treasury's explanation of the new clauses in July', including the following comment: "This measure is targeted at those who have a property building trade; it does not impact the tax profile for investors in UK property."
Ahead of Report Stage next week, the NLA has now confirmed with the HMRC official responsible that these measures are still not designed to alter the existing tax arrangements between landlords and HMRC.
The message is clear: "HMRC considers that generally property investors that buy properties to let out to generate property income and some years later sell the properties will be subject to capital gains on their disposals rather than being charged to income on the disposal."
Article courtesy of Landlord Today | Sign up for Landlord Today newsletter | Get this news on YOUR site!