For landlords operating through a limited company (a property investment company) and employing up to five staff members, the Autumn Budget 2024 includes several provisions that may affect tax liabilities, investment opportunities, and business operations.
Here’s a summary of the most relevant announcements for such businesses:
1. Corporation Tax
Corporation Tax Rate: As in previous budgets, the standard corporation tax rate remains at 25% for profits over £250,000. However, if your property company has profits under £50,000, it will continue to benefit from the small profits rate of 19%.
Marginal Relief: Companies with profits between £50,000 and £250,000 can benefit from marginal relief, reducing the effective tax rate gradually between the 19% and 25% brackets. This may apply if your business has fluctuating income levels.
2. Property Investment and Capital Allowances
Full Expensing: The government is continuing the full expensing scheme for capital investment, meaning your limited company can deduct 100% of the cost of qualifying capital assets (such as new equipment, technology, or certain types of building improvements) in the year of purchase. This is especially beneficial if you're investing in property-related improvements (e.g., upgrading heating systems, installing new technology for tenants).
This scheme is set to remain in place for another year, supporting landlords who wish to invest in their properties or improve energy efficiency.
3. Research and Development (R&D) Tax Relief
If your property company is involved in research and development—for example, if you're investing in sustainable building technologies, smart home systems, or energy-efficient renovations—you could benefit from enhanced R&D tax relief.
Enhanced SME R&D Tax Relief: Small businesses, including property investment companies, can claim additional support for qualifying R&D activities. If your company is working on innovative technologies (such as green tech in properties or building renovation techniques), this could reduce your corporation tax liability.
4. Dividend Tax
Dividend Tax Allowance: For limited companies, the £1,000 dividend tax allowance remains unchanged for the 2024/25 tax year. After this, dividends are taxed at:
8.75% for basic rate taxpayers
33.75% for higher rate taxpayers
39.35% for additional rate taxpayers
This allowance is useful for landlords paying themselves through dividends, reducing the amount of tax payable on income taken from the company.
5. Capital Gains Tax (CGT)
The Capital Gains Tax treatment of property disposals through a limited company remains the same. When selling a rental property, the company will be liable for CGT on any profits above the original cost (minus allowable expenses, like maintenance and improvements).
The annual exempt amount for CGT remains at £6,000 for individuals (as of 2024/25), but if the property is owned by a company, CGT applies to the full gain without the individual exemption.
6. National Insurance Contributions (NICs)
National Insurance: There were no major changes to Class 1 or Class 2 NICs for employers or self-employed individuals, which means your staff will continue to be subject to the same NIC thresholds and rates.
NICs for Directors: If you are also a director of your property company, you'll continue to pay Class 1 NICs on your salary. However, since you're operating a limited company, you'll still have the flexibility to take dividends, which are not subject to NICs.
7. Business Rates and Property Reliefs
Business Rates: For small property companies with commercial property holdings (e.g., HMOs, mixed-use developments), the government has confirmed that business rates relief for small businesses will continue. This provides some relief if you own or operate a small commercial property alongside residential lettings.
There were no significant changes to property-related reliefs in this budget, but it’s important to stay informed about any future adjustments to rates or specific incentives for energy-efficient property improvements.
8. Green and Energy Efficiency Initiatives
As part of the net-zero agenda, landlords (including those operating through limited companies) can take advantage of green investment incentives. This includes:
Grants for energy-efficient upgrades: You may qualify for government grants to make your properties more energy-efficient (e.g., insulation, renewable energy systems like solar panels).
Capital Allowances for Green Investments: Full expensing can apply to certain green improvements, like the installation of energy-efficient systems in your rental properties (e.g., electric heating, low-carbon technologies).
9. Employment and Staff
Business Rates: For small property companies with commercial property holdings (e.g., HMOs, mixed-use developments), the government has confirmed that business rates relief for small businesses will continue. This provides some relief if you own or operate a small commercial property alongside residential lettings.
There were no significant changes to property-related reliefs in this budget, but it’s important to stay informed about any future adjustments to rates or specific incentives for energy-efficient property improvements.
10. Tax Reliefs for Investment in Affordable Housing
The government has continued support for landlords and property developers involved in building affordable housing. This could include tax incentives or targeted grants if you're investing in or converting properties for affordable housing schemes, though specifics on these will depend on regional initiatives.
11. Self-Employment and NICs
If you are drawing a salary from the limited company, you’ll continue to pay Class 1 NICs on your salary. However, because you are operating through a company, you have flexibility in how you draw income, which may involve taking dividends rather than salary to reduce NICs, though you still face dividend tax.
12. Stamp Duty for Landlords and Second Homes
No new rise in SDLT for landlords was announced in the Autumn Budget 2024. However, it is important to note that the government has continued to emphasize policies aimed at supporting first-time buyers and reducing demand for second homes or buy-to-let purchases.
The 3% surcharge on additional properties remains in place. As of now, there has been no indication from the government that it plans to raise this surcharge further, but future property tax reforms could see additional measures.
Summary of Key Takeaways for Property Investors with a Limited Company:
Corporation tax remains at 25% for profits above £250,000, but small businesses (profits under £50,000) continue to benefit from the 19% rate.
Full expensing of capital investments is available, making it easier to invest in energy-efficient improvements and property upgrades.
R&D Tax Relief has been enhanced, allowing for greater support if you’re investing in innovative property technologies.
Dividend tax and capital gains tax rules remain in place, so managing how you take income and sell properties is important for tax efficiency.
Business rates relief and employment allowances continue for small employers with commercial property holdings and a small number of employees.
Green investment incentives remain, helping with energy-efficient property upgrades or renewable energy installations.
No significant changes to NICs for employers or employees.
No New SDLT Hike for Landlords
Overall, the Autumn Budget 2024 provides opportunities for property investors through tax reliefs, capital allowances, and green investment incentives, alongside the flexibility of using a limited company structure for rental income and property management.
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