Chancellor’s Spring Statement

iHowz’s landlords will welcome many of the headline announcements from the Chancellor’s spring statement today:
– Fuel duty cut by 5p / litre for 12 months
– VAT cut to 0% on installing energy saving measures, such as solar, heat pumps and insulation,
– Councils given additional funds for Household Support Fund, doubling it to cut to £1bn
The contentious new NIC surcharge has been mitigated by raising the NIC threshold £3,000 to match the income tax threshold of £12,570.
While this will have limited impact on landlords, together with the increase in the household support fund, it will help economically vulnerable tenants.
The promise of jam tomorrow comes as a promise of 19% basic rate income tax by the end of this Parliament in 2024.
With Make Tax Digital due to go live over the next two years, landlords will also welcome the Help to Grow Digital incentive, which could also help with development of other digital solutions, such as marketing and implementing property management systems.
Larger landlords, who have staff, may also benefit from the increase in the employment allowance to £5,000

BPF Statement 

Note additionally a statement from the BPF, of which iHowz are a member:
In his Spring Statement announcement earlier today, the Chancellor put a heavy emphasis on the need to strengthen the UK economy and take difficult decisions to ensure its long term success. As widely expected, he also acknowledged the cost of living crisis affecting millions of people and announced further support measures, such as cutting Fuel Duty by 5p a litre for the next 12 months.While the announcement was not a full fiscal event, it did contain some policy changes of relevance to the property industry. We set these out below, along with our initial reaction. We’d love to hear your views on today’s announcement – please contact Ion Fletcher or Rob Wall with any questions or comments.

VAT relief for energy saving materials (ESMs)

The government will reverse a Court of Justice of the European Union ruling that restricted the application of VAT relief on the installation of ESMs. This will mean wind and water turbines will be added to the list of ESMs and the complex eligibility conditions will be removed. The government will also increase the relief further by introducing a time-limited zero rate for the installation of ESMs. The changes will take effect from April 2022. The Northern Ireland Executive will receive a Barnett share of the value of this relief until it can be introduced UK-wide.

This is a step in the right direction to making sustainable retrofit of residential property more affordable and as such is a positive. But it falls short of our call for all home improvement work to be zero-rated, which would have provided a much more meaningful incentive for people to upgrade their homes and making them more energy efficient. 


Green reliefs for Business Rates

At Autumn Budget 2021 the government announced the introduction of targeted business rate exemptions from 1 April 2023 until 31 March 2035 for eligible plant and machinery used in onsite renewable energy generation and storage, and a 100% relief for eligible low-carbon heat networks with their own rates bill, to support the decarbonisation of non-domestic buildings. The government is bringing forward the implementation of these measures and is announcing that they will now take effect from April 2022. Local Authorities will be compensated for the loss of income as a result of these measures and will receive new burdens funding for any administrative and IT costs. Business rates are England only and the devolved administrations will receive Barnett consequential funding in the usual way.

We have campaigned hard for business rates relief for energy efficient plant and machinery, and we are pleased to see the Chancellor bring forward this relief by a year encouraging early investment into making commercial buildings greener. 


Levelling Up Fund second round

The government is launching the second round of the Levelling Up Fund and will shortly publish a refreshed Prospectus, inviting bids to come forward from all eligible organisations across the UK. This is not new money, but an opportunity to bid for a second tranche of the remaining £3.1bn in the Fund. The Fund provides £4.8 billion for local infrastructure projects, with £1.7 billion already allocated to 105 successful projects from the first round.

We welcome any additional funding for local regeneration projects, but we are always wary of some of the pitfalls in competitive bidding processes, in terms of energy expended on bids, and some localities being better skilled at bidding than others. The Chancellor could also have done more to reinforce the importance of attracting the private capital that will enable long-term, sustainable regeneration including through our proposal for Town Centre Investment Zones.


Tax Plan

The government’s goal is now to reform and reduce taxes. The government will do that through its Tax Plan, which contains three key priorities. First, it is taking action now to help families with the cost of living. Second, it intends to cut and reform business taxes, to create a new culture of enterprise and the conditions for private sector-led growth. Finally, it will share the proceeds of higher growth fairly with working people, through further tax cuts. The government also intends to make the tax system simpler, fairer and more efficient through this plan.

Greater certainty regarding the future direction of travel of the UK’s complicated tax system is always welcome.  

It is also good to see the Government acknowledge that the tax system needs to be more supportive of capital investment, of which the property industry delivered more than £63bn in 2019 and much more of which will be needed to fulfill the Government’s levelling up ambitions.  

The Structures and Buildings Allowance (SBA), which provides tax relief for buying new commercial buildings, is particularly relevant in this context and we will be strongly encouraging the Chancellor to make this relief more generous than its current rate of 3% per year.  

SEARCH

YOU MAY ALSO LIKE

CATEGORIES
SOCIAL
Twitter feed is not available at the moment.

1 Comment

  1. Rodney Townson

    Still no proper funding (or confirmation of requirements) for landlords to make their properties more fuel efficient.

    Surely, this is the best use of funds to provide a long terms solution to climate change, energy prices and fuel poverty.
    Minimising heat loss and energy usage is the sustainable (economically and environmentally) responsible way to ensure homes are fit for 2025 and beyond.

Submit a Comment