Simplified cash basis for unincorporated property businesses
Most unincorporated property businesses with receipts of up to £150,000 will be able to calculate their taxable profits using a cash basis of accounting from 6 April 2017. Limited liability partnerships, trusts and partnerships with corporate partners will be excluded. Those with both a UK and an overseas property business will be able to choose separately whether to use the cash basis for each. Likewise those with a trade as well as a property business will be able to elect separately for the cash basis for each. People who are not spouses or civil partners and jointly own a rental property will be able to decide individually.
To align the treatment with those who opt to use Generally Accepted Accounting Principles (GAAP), the initial cost of items used in a dwelling house will not be an allowable expense under the cash basis. But the existing ‘replacement of domestic items relief’ will continue to be available. Interest expense will be treated consistently between those using the cash basis and those using GAAP.
The government will consult on changes to rent-a-room relief to ensure it is targeted to support longer-term lettings.
Stamp duty land tax
The reduction in the filing and payment window will be delayed until 2018/19.
The government will provide £435 million of further support for businesses facing significant increases in business rates in England in addition to the transitional relief announced in November 2016. This will include support for small businesses losing Small Business Rate Relief to limit increases in their bills to the greater of £600 or the real terms transitional relief cap for small businesses each year. However, in the first year the maximum increase will be £600. In addition, English local authorities will receive funding to support £300 million of discretionary relief, to allow them to provide support to individual hard cases in their local area.
For one year from 1 April 2017, there will be a £1,000 business rate discount for pubs with a rateable value of up to £100,000, subject to state aid limits for businesses with multiple properties. The government will consult about its preferred approach for moving to three-yearly revaluations ahead of the next revaluation in 2022.
Offshore property developers
The government will amend legislation to ensure that all profits realised by offshore property developers developing land in the UK, including those on pre-existing contracts, are subject to tax, with effect from 8 March 2017.
The dividend allowance will be cut to £2,000 from 2018/19. Take advantage of the increased ISA allowance of £20,000 in the new tax year.