Philip Hammond’s first and last Spring budget contained very little that directly affected landlords, but millions of self-employed people will be counting the cost of a 1% increase of Class 4 National Insurance contributions. The increase will come into effect in April next year, and will be followed by a further 1% increase from 2019.
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The extra money raised by the Chancellor will be used to fund the extra £2 billion intended to be spent on social care.
Reduced Tax Free Dividends
The main measure included in this budget that is likely to affect landlords is a reduction in the amount company directors can take as tax free dividends. The tax-free amount has been reduced from £5,000 to £2,000 as of April next year, so if you were considering incorporating to reduce your tax bill, it’s a good idea to do your sums, as it might not be worth the cost.
20% of Landlords Affected by the Spring Budget
The Residential Landlords Association (RLA) estimates that 20% of landlords will be affected by Philip Hammond’s increase in Class 4 National Insurance contributions and a reduction in dividend tax relief.
There was some suggestion that the Chancellor would make changes the stamp duty tax on second properties, but Mr Hammond has ruled this out. However, he says he will consider a revision later on this year if the figures show an increase to SDLT has caused had a significant effect on property transactions and revenue to the Treasury.