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Many of the tax changes affecting Real Estate which were announced on Friday 23 September 2022 have since been reversed. Those which are still in place include:

  • The reduction in SDLT for residential property acquisitions in England and Northern Ireland (increase in nil-rate tax threshold from £125,000 to £250,000, increase in nil-rate threshold for First Time Buyers’ Relief from £300,000 to £425,000 and increase in maximum amount eligible for First Time Buyers’ Relief to £625,000)
  • The capital allowances Annual Investment Allowances to be permanently set at £1m.

The reversal of the proposal to abolish the additional rate of income tax rate of 45% was announced on 3 October 2022. This means that the 45% rate will therefore remain payable by certain UK/non-UK individuals, and certain trusts, on UK property income. 

In addition, it was announced on 14 October 2022 that the proposal to reverse the already legislated increase in corporation tax from 19% to 25% from 1 April 2023 will not go ahead. This means that the corporation rate will increase from 1 April 2023. This rate will apply to UK and non-UK companies in respect of UK property income and trading profits in relation to UK immovable property, UK companies in relation to their capital gains, and non-UK companies (and certain deemed companies) in respect of direct and certain indirect disposals of UK immovable property.

Finally, the new Chancellor, Jeremy Hunt, has today confirmed that the proposal to reduce the basic rate of income tax from 20% to 19% from 6 April 2023 will no longer go ahead. This means that the existing 20% will continue to apply to the rate of withholding tax (e.g. in relation to UK source interest payments paid to non-residents, property income distributions paid by a UK REIT, and UK rents paid to non-resident landlords who are not registered for gross payment).

No comment has been made in respect of the proposal to introduce Investment Zones. 

If you have any queries, please get in touch with your usual PwC Real Estate contact.