Briefings
REAL ESTATE: BUDGET BRIEFING 2009
| Release Date:
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23 April 2009
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Overview
There is little to excite the property industry in the Budget. There are few measures to stimulate the property market which is disappointing. On the other hand there is not much in the way of anti avoidance either.
Capital Allowances
Expenditure on general plant and machinery incurred between April 2009 and April 2010 will qualify for double the normal rate of capital allowances i.e. 40% instead of 20%. This is designed to accelerate investment. However the restricted 10% allowance attributable to certain items of plant integral to a building is unchanged which limits the impact of this measure.
SDLT
The SDLT holiday for individuals purchasing residential property for less than £175,000 is extended until 31 December 2009.
There will be a new system of relief for shared ownership schemes operated by Registered Providers of Social Housing and relief for leasehold enfranchisement without the need for there to be a Right To Enfranchisement company.
AFIBs
New SDLT reliefs as well as reliefs from capital gains taxes and capital allowances will make land backed Alternative Finance Investment Bonds a viable prospect.
VAT
The VAT rate will remain at 15% until 31 December and then revert to 17.5%. There will be anti avoidance provisions to prevent the artificial manipulation of the VAT tax point so as to take advantage of the lower rate.
The rules which require prior permission from HMRC to opt to tax land which has previously been the subject of an exempt supply will be eased so there will be more cases where permission is not required.
REITS
Enabling legislation will allow anti avoidance provisions to be introduced by regulation. The immediate proposal is to prevent artificial structures which allow the letting of property within a group.
Positive amendments include clarification of the assets test, the ability for REITs to issue convertible preference shares and an easing of the requirements at the date of entry into the REITs regime.