What the April 2018 tax changes mean for your property
Now we are in the 2018/19 tax year, a number of key changes have taken place to existing policies while some new initiatives also come into effect.
Here’s what the changes mean for your home or rental properties:
Council Tax: Local councils in England have been given the authority to raise council tax by up to 5.99%, adding more than £100 to the average property’s bill in April.
Personal Allowance: The amount of money you can earn before you start paying income tax will rise with inflation from the current level of £11,500 to £11,850.
Higher rate threshold: For higher rate taxpayers, the threshold will rise from £45,000 to £46,350 in the new tax year. The government has already committed to raising the higher rate threshold to £50,000 by 2020.
Capital Gains Tax: CGT is charged on the profits made when certain assets are sold or transferred. If all gains in a tax year fall within the annual CGT allowance (£11,300 for 2017/18, £11,700 for 2018/19) there is no tax to pay.
Energy Performance Certificates: As of 1 April, all buildings within the scope of Minimum Energy Efficiency Standards (MEES) must have a minimum Energy Performance Certificate (EPC) rating of E, or they will be illegal to rent out. Landlords face fines of up to £4,000 if they don’t meet the grade.
Residence nil rate band: The current inheritance tax nil-rate band is £325,000 but married couples and civil partners can pass this on to the surviving spouse meaning there’s no IHT to pay on the first £650,000. But spouses also get an extra allowance – the residence nil rate band – of £125,000 in the 2018/19 tax year where a main residence is passed to a direct descendant.
Mortgage interest: Last year, landlords could deduct their full mortgage interest costs from their income when calculating their tax bill. Now, landlords are only able to offset 75% of their mortgage interest. In the 2018/19 tax year, this figure will drop to 50%.