Wrekin Landlord Services Ltd The impact on landlords of the Summer Budget 8 th July The Tax Changes 2.The Welfare Changes 3.The Impact on the Housing Rental Market

Wrekin Landlord Services Ltd The Tax Changes for Landlords 1.The 10% Wear & Tear Relief as gone. 2.Rent-a-Room Relief increased. 3.Finance Costs Restricted to Basic Rate Tax. 4.Inheritance Tax, additional Family Home Allowance. 5.Dividends £5,000 Tax Free Allowance. 6.Corporation Tax Cut.

Wrekin Landlord Services Ltd The Tax Changes The 10% Wear & Tear Relief for Furnished Lettings as gone from April 2016, Landlords can now claim actual costs. Rent a Room Relief increases from £4,250 to £7,500 from April 2016, i.e. If you have a lodger in your own home.

Wrekin Landlord Services Ltd The Tax Changes Restriction on Interest Relief to Basic Rate from April 2017 i.e. Interest on Mortgages will be Restricted to 20% of costs on Residential, but not commercial properties and Ltd Co. Phased in Over 4 Years

Wrekin Landlord Services Ltd Tax Years 14/15 & 15/16 & 16/17 No Change 100% Claimable Tax Year 17/18 75% Claimable, 25% Restricted to Basic Rate (75%+(25%x20%)=80% Tax Year 18/19 50% Claimable, 50% Restricted to Basic Rate (50%+(50%x20%)=60% Tax Year 19/20 25% Claimable, 75% Restricted to Basic Rate (25%+(75%x20%)=40% Tax Year 20/21 100% Restricted to Basic Rate (100%x20%)=20%

Wrekin Landlord Services Ltd Inheritance Tax, additional Family Home Allowance phased in over 4 years. 2017/18 £100, /19 £125, /20 £150, /21 £175,000 Transferable to Surviving Spouse, £1,000,000 in Total Nil Rate Band frozen at £325,000 until April 2021

Wrekin Landlord Services Ltd Dividends £5,000 Tax Free Allowance. From April 2016 the Notional Tax Credit will go to be Replaced with £5,000 Tax Free Dividend Allowance. After the Tax Free Allowance Dividends will be taxed at: 1.Basic Rate Tax Payers 7.5% 2.Higher Rate Tax Payers 32.5% 3.Additional Rate Tax Payers 38.1%

Wrekin Landlord Services Ltd Corporation Tax Cut, for small Companies. Currently 20% From April 2017 cut to 19% From April 2020 cut to 18%

Wrekin Landlord Services Ltd Other Tax Changes 1.Annual Investment Allowance 2.Pension Tax Relief Restricted for Higher Earners 3.Non-Domiciled Taxpayers

Wrekin Landlord Services Ltd Current Position Profit Rent (£550*12) £6,600 10% W&T £660 Repairs £1,000 Net Profit £4,940 Interest (4%*60K)£2,400 Taxable Profit £2,540 Tax BR 20% £508 Tax HR 40% £1,016

Wrekin Landlord Services Ltd Current Position Profit Rent (£550*12) £6,600 10% W&T £660 Repairs £1,000 Net Profit £4,940 Interest (4%*60K)£2,400 Taxable Profit £2,540 Tax BR 20% £508 Tax HR 40% £1,016 Current Position Cash Rent (£550*12) £6,600 10% W&T £0 Repairs £1,000 Interest (4%*60K) £2,400 Taxable Profit £3,200 Tax BR 20% £508 Tax HR 40% £1,016 BR Net Cash £2,692 HR Net Cash £2,184

Wrekin Landlord Services Ltd After Tax Changes Profit Rent (£550*12) £6,600 10% W&T £0 Repairs £1,000 Taxable Profit £5,600 Tax BR 20% £1,120 Tax HR 40% £2,240 Interest Restricted £480 Net Tax BR £640 Net Tax HR £1,760

Wrekin Landlord Services Ltd After Tax Changes Profit Rent (£550*12) £6,600 10% W&T £0 Repairs £1,000 Taxable Profit £5,600 Tax BR 20% £1,120 Tax HR 40% £2,240 Interest Restricted £480 Net Tax BR £640 Net Tax HR £1,760 After Tax Changes Cash Rent (£550*12) £6,600 10% W&T £0 Repairs £1,000 Taxable Profit £5,600 Net Tax BR 20% £640 NetTax HR 40% £1,760 Interest £2,400 Net BR Cash Flow £2,560 Net HR Cash Flow £1,440

Wrekin Landlord Services Ltd The Welfare Changes LHA Rates and Tax Credits frozen for 4 Years from April 2016 WHT and Other Social Landlords rents reduced by 1% a year from April 2016 for 4 years. From April 2017, Year Olds will not automatically get LHA. From April 2016 LHA claims will be backdated for max of 4 weeks. From April 2016 Benefit Cap Reduced to £20,000

Wrekin Landlord Services Ltd Likely changes to property market 1.Interest Rate Rises, 2% in next couple of years (B of E). 2.Rents softening in Telford, due to benefit cap & LHA changes.

Wrekin Landlord Services Ltd After Tax Changes Profit Rent (£500*12) £6,000 10% W&T £0 Repairs £1,000 Taxable Profit £5,000 Tax BR 20% £1,000 Tax HR 40% £2,000 Interest Restricted £720 Net Tax BR £280 Net Tax HR £1,280

Wrekin Landlord Services Ltd After Tax Changes Profit Rent (£500*12) £6,000 10% W&T £0 Repairs £1,000 Taxable Profit £5,000 Tax BR 20% £1,000 Tax HR 40% £2,000 Interest Restricted £720 Net Tax BR £280 Net Tax HR £1,280 After Tax Changes Cash Rent (£500*12) £6,000 10% W&T £0 Repairs £1,000 Taxable Profit £5,000 Net Tax BR 20% £280 NetTax HR 40% £1,280 Interest £3,600 Net BR Cash Flow £1,120 Net HR Cash Flow £120

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