Chancellor Rishi Sunak recently gave his Autumn Budget speech, in which he laid out his tax plans after a tough year caused by pandemic – and Brexit-related problems.
You’ve probably heard the main announcements by now: an increase to the national living wage, a cut to alcohol duties and a new commitment to R&D – you might even have heard the Government tucked away an extension to the recovery loan scheme in its full Autumn Budget document.
But what announcements did he make relating to the housing and property sectors?
What did the Chancellor’s Budget do for affordable housing?
The Government is committed to growing house supply year on year, as it has done since 2012/13. In 2019/20, English housing supply will reach record levels, amounting to 244,000 homes.
In his Spending Review, which the Chancellor delivered alongside his Budget speech, Sunak announced £24 billion for a “multi-year housing settlement”, which includes:
- an additional £1.8bn to deliver £10bn of investment in housing supply since the start of Boris Johnson’s Government to 2025/26 “and beyond”
- £11.5bn investment in the affordable homes programme to build 180,000 new homes
- £5bn to remove unsafe cladding from buildings most at risk of fires
- £65 million investment to improve planning regime.
Autumn Budget: residential property developer tax
To pay for the £5bn investment needed to remove unsafe cladding, the Government has asked property developers to contribute through a new tax.
This tax, the residential property developer tax (RPDT), otherwise known as the ‘cladding tax’, will be applied at 4% on the profits of companies involved in residential property development from 2022/23.
The RPDT will only kick in on profits over a £25m threshold so, as the Treasury put it, “the largest developers make a fair contribution to help pay for building safety remediation”.
Between the 2022/23 and 2026/27 tax years, the Treasury estimates revenues from the cladding bill will reach £1.125bn, underscoring how the RPDT is only contributing to the £5bn investment for cladding removal.
Business rates reform
Sunak also announced a reform to business rates in his Autumn Budget speech, making a number of announcements on the subject.
First, the Chancellor said the business rates multiplier would be frozen for 2022/23, saving businesses in England £4.6bn over the next five years, according to figures from the Treasury.
Business rates revaluations will also occur more frequently – every three years, rather than every five – so the rates businesses pay are fairer and easier to work out.
Meanwhile, businesses that make eligible improvements to increase the value of their property will be entitled to a 100% improvement relief for business rates for 12 months.
The Government will consult on how best to implement this relief, which will take effect in 2023 and be reviewed in 2028.
Finally, eligible retail, hospitality and leisure businesses will only have to pay 50% of their business rates in 2022/23, up to a cap of £110,000.
Businesses in these sectors were due to switch from paying 33% of their bills to 100% on 1 April 2022. The continued, albeit reduced, support will therefore be welcome to many business owners.
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