REDUCTION IN CAPITAL GAINS TAX AND WHAT LANDLORDS NEEDS TO KNOW IN APRIL 2024

The beginning of April 2024 marks the start of the new tax year, with possible changes for letting agents and landlords this upcoming month. From the Capital Gains Tax to the Local Housing Allowance, here are the key things Landlords’ need to know this month.

What to look out for in April 2024:

• Local Housing Allowance
• Reduction in Capital Gains Tax
• VAT Registration Threshold
• The Leasehold and Freehold Bill enters the Committee Stage

Local Housing Allowance

Local Housing Allowance (LHA) is used to calculate housing benefits for tenants from private landlords.

This is dictated by the Department for Work and Pensions and is based on the private market rents being paid by tenants in a Broad Rental Market Area (BRMA).

From the start of April 2024, the government plans to raise LHA which will benefit some of the poorest families on universal credit or housing benefit and will gain around £800 a year.

The amount of local housing allowance is dependent on the area where the property is based. You can find out the rates by postcode or local authority here.

Capital Gains Tax is reducing

From 6 April 2024, landlords who own properties in their name will have a smaller Capital Gains Tax.

Capital Gains Tax applies when someone makes a profit from selling a property that isn’t their main home. This includes selling buy-to-let properties, business premises, land, and inherited properties.

As mentioned in the Spring Budget, the tax will be reduced from 28% to 24%. This means that if landlords are really selling up, they will be charged less by this tax. 

Find out the five key letting agents should know from the Spring Budget

VAT Registration Threshold for short-term lets

Residential properties are exempt from VAT. However, an increase in the VAT registration threshold may soon affect landlords with holiday accommodation and short-term lets.

As announced in the Spring Budget this year, the VAT threshold will increase from £85,000 a year to £90,000, starting on 1 April 2024.

This means that any landlords earning under the £90,000 threshold will not have to register for VAT, and can earn more without being taxed.

The Leasehold and Freehold Bill enters the Committee Stage

The Leasehold and Freehold Bill will enter the committee stage in April. Since being unveiled in November 2023, this bill has caused a lot of controversy within the private rental sector.

In March 2024, it was reported, following a consultation, it was reported that Michael Gove, Secretary of State for Levelling Up, Housing and Communities, may abolish the introduction of “peppercorn” rates, a key element of the Leasehold and Freehold Bill.

The Committee stage of the Bill should iron out the current issue on ground rents and how transparent service charges will be in the future. 

Find out more about the Leasehold and Freehold Reform Bill

SOURCE: Goodlord