Property Taxes


Clause 79 corrects a technical error removing a potential double charge that may result from the interaction of the non-residents CGT (NRCGT) rules with the rules on CGT related to the annual tax on enveloped dwellings (ATED) and other aspects of the CGT code.

The Finance Act 2015 changes limited the availability of relief on a disposal of personal assets used in a business (‘associated disposals’) when the business was sold to members of the claimant’s family under normal succession arrangements.

In the CIOT’s recent submission to the Treasury Committee’s Inquiry into the 2016 Budget, we said the following: 

Clause 69 introduces the new replacement relief for landlords for capital expenditure incurred in replacing furnishings, appliances etc. It replaces the old wear and tear allowance that was available for furnished lets only (repealed by clause 70). The old wear and tear allowance allowed landlords to deduct (broadly) 10% of their rental income regardless of expenditure actually incurred.

The amendments made by clause 26 to the provisions dealing with the restriction of relief for finance costs relating to residential property businesses (originally enacted in Finance (No 2) Act 2015) do not address the anomaly raised at the time by the CIOT, ie. its application to Interest In Possession Trusts1 (IIP trusts) and personal representatives (PRs) that carry on a property business in circumstances where there is low or nil net rental income after finance costs. The tax treatment undermines the basis of taxation of an IIP trust and, perhaps to a lesser extent, of PRs.

This extends the deduction allowable in section 94H of the Income Tax (Trading and Other Income) Act 2005 (ITTOIA 2005) in respect of the use of a person’s home for the purposes of a trade to cases where the trade is carried out by a partnership.  

With the support of the ICAEW, the Stamp Taxes Practitioners Group, STEP and the Law Society, the CIOT has made a detailed submission to HMRC and HM Treasury on the advantages of removing or mitigating the barriers to de-enveloping residential property in the light of the proposals outlined at the 2015 Summer Budget for new Inheritance Tax rules on UK residential property held indirectly by non-UK domiciliaries.

Revenue Scotland have published their Land and Buildings Transaction Tax (LBTT) ‘how to’ guidance on the Revenue Scotland website, updated to include material about how to make returns for LBTT transactions that include payment of the Additional Dwelling Supplement (ADS), which comes into effect on 1 April 2016.

Revenue Scotland provide details of the events they are holding in March.