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Could property taxes and environmental issues dominate this year’s headlines?

The improbable alliance of property taxes and environmental issues may well be the major focus of the Chancellor’s budget announcements on the 19th March.

The property market has clawed itself out of the pit that it fell into in the immediate aftermath of the financial crisis. In particular, the residential property market is showing signs of healthy growth which should translate into significant gains for the Treasury in the form of SDLT.

There is probably no better time to introduce some long sought-after reforms to the rate structure. A simple change would be to increase the nil-rate band from £125,000 to at least £150,000 to align it with that for non-residential properties and preferably to at least £250,000 (to allow for price changes since the last increase). Another would be to move to charging only the value in excess of a threshold at the higher rate. This would not only avoid the distortion caused by purchasers facing significant increases in tax, as the price of a property crosses a threshold, but would also clearly highlight the marginal rates of tax.

Any simplification of the tax system is always welcome and a number of technical changes to SDLT are likely to become the subject of consultation. In particular, the changes made to facilitate joint ownership interests by charities may also be extended to registered social landlords.

We are still waiting for further details of the proposals to subject non-UK residents owning UK residential properties to CGT and it is increasingly likely that further details will be made available at the time of the other budget announcements.

The impact of the “wettest winter on record” has, for some been devastating. Although a number of spending measures have already been announced, further announcements would undoubtedly be welcome. A reduced rate of VAT for certain repairs would have a very positive impact on the service sector.

This was posted in Bdaily's Members' News section by Baker Tilly .