Key Changes Impacting the Real Estate and Construction Sectors

The Chancellor of the Exchequer, George Osborne MP, made his 4th Budget statement today (20th March 2013) under the ‘banner’ of aspiration and growth for the UK economy

Red Book

Income Tax

Income Tax threshold increased to £10,000 from April 2014 and simplification on smallest businesses to calculate tax on ‘cash basis’ – although possibly some impact on availability of Capital Allowances, other than on cars.

Corporation Tax

Corporation Tax (CT) to be reduced to 20% from April 2015 unifying the Main and Small Profit CT rates.

Capital Allowances – changes to Energy and Water Technology Lists – part of annual review of ECA technologies

ETL – adding new sub technology for CO2 Heat Pumps for Water Heating

ETL – removal of sub-technologies: Automatic Boiler Blowdown Control Equipment; Condensate Pumping Equipment; Switched Reluctance Drives and Automatic Air Purgers

ETL – amendments to qualifying criteria for twenty other technologies

WTL – addition of new grey water re-use technology

WTL – merger of two sub-technologies: Efficient Membrane Filtration Systems and Wastewater Recovery and Re-use within the water re-use systems

WTL – amendments to the criteria for water flow meters

WTL – removal of Shower Flow Regulator sub-technology

Capital Allowances – Railway Assets and Ships

Rules to be amended from April 2013 to remove prior exclusion from 100% FYAs – minor timing change only, aimed at accelerating investment.

Capital Allowances – Changes to 100% FYA for ECAs and Renewable Heat Incentives(RHI) for Northern Ireland

Rules to be amended to remove ‘double benefit’ anomaly bringing NI in to line with treatment in rest of UK – that allows either ECAs or RHI – but not both!

General Anti-Abuse Rule (GAAR)

General Anti-Abuse Rule (GAAR) to be brought into law from date of Royal Assent of Finance Bill 2013 (FB13) facilitating a review of aggressive or abuse tax arrangements or schemes

Stamp Duty Land Tax

SDLT – Continued focus by HMRC on SDLT planning - involving sub-sale or transfer of rights schemes under s45 FA2003 – impacts transfer of rights on or after 21 March 2012 and before Royal Assent of FB13

Residential Sector

From 1 April 2013 extending ‘Help to Buy’ equity loan will be opened up to all (not just first buyers) who aspire to own a new build home. The Government will provide an equity loan worth up to 20 per cent of the value of a new build home, repayable once the home is sold; significantly widen the eligibility criteria to ensure as many people as possible are able to benefit on homes up to a purchase price of £600,000.

Furthermore, a new temporary mortgage guarantee scheme to increase the availability of mortgages on new or existing properties for those with small deposits. The Help to Buy: mortgage guarantee. It will run for three years from January 2014, on mortgages to people with a deposit of between 5 per cent and 20 per cent and be available on homes up to £600,000 in value.

Where We Can Help

E3 Consulting, property taxation specialists, operate from offices in Southampton and London and work with clients that own, operate, develop or invest in property across the UK as well as overseas. We also work closely with other professionals, including accountants, solicitors, surveyors, bankers or engineers to ensure their clients’ projects are properly incorporating the appropriate tax breaks, incentives or costs.

If you would like to discuss any aspects further please contact our team to understand how you, or your contacts or clients, might be impacted (or indeed benefit) from these announcements. To see how much you could save against any current, future or even historic property expenditures contact us.

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