The income tax personal allowance (above which you pay 20% tax) and higher rate threshold (above which you pay 40% tax) are both frozen at £12,570 and £50,270 respectively until April 2028. The threshold at which the additional rate (45% tax) is paid is coming down from £150,000 to £125,140 from April 2023.
This will affect landlords with net UK rental income in excess of the personal allowance as more of their income will be taxed in the UK and possibly taxed at higher rates due to the thresholds not increasing in line with inflation.
Previous plans to reduce the basic rate of income tax from 20% to 19% have been scrapped.
For Guernsey taxpayers, there would be full double tax relief for UK tax paid up to the Guernsey rate of 20% so, in most cases, the overall tax burden will be unaffected.
Capital Gains Tax
The CGT annual exempt amount, which is the personal allowance for chargeable gains, is being halved in April 2023, going from £12,300 to £6,000 per person. Then in April 2024 it is halved again to £3,000.
This will impact on UK property owners when they dispose of their properties at a gain as more of the gain will be taxed. For a residential property, where CGT rates go up to 28%, this could mean up to an additional £1,764 of tax if a property is sold between 6 April 2023 and 5 April 2024 or £2,604 if sold after that.
Stamp Duty Land Tax
The SDLT cuts previously announced in September are now set to end at the end of March 2025.
The “nil rate” threshold in England and Northern Ireland has been doubled from £125,000 to £250,000. The “nil rate” threshold for first time buyers also increased, from £300,000 to £425,000 (for properties worth £625,000 or less).
The 2% surcharge for non-UK residents and the 3% additional property surcharge still apply. See the table below for the current bands relevant for Channel Island residents buying UK residential property.
|SDLT Rates Payable by Non-UK Residents on UK Residential Properties|
|Residential Property Value||Only Property||Additional Property|
|Up to £250k (£125k after March 2025)||2%||5%|
|Next portion from £250k to £925k||7%||10%|
|Next portion from £925k to £1.5m||12%||15%|
|Remaining amount above £1.5m||14%||17%|
The IHT nil rate band is frozen at £325,000 until April 2028.
As asset values rise over time, this will have an impact on the IHT charged on the estates of UK domiciled individuals, and non-UK domiciled individuals holding UK assets, where their chargeable assets are, or will be, valued in excess of this threshold.
As previously announced, the top rate of Corporation Tax will increase in April 2023 to 25%. Companies with profits under £50,000 will continue to be taxed at 19%, 25% will be paid by companies with profits over £250,000 and those in between will be on a sliding scale.
Non-UK resident companies pay Corporation Tax on their UK rental income and on chargeable gains made when selling their UK property. Those with profits plus gains in excess of £50,000 any year may start to pay more than 20% UK tax on their income.
Guernsey resident shareholders benefitting from tax credits in respect of their companies’ UK Corporation Tax will only get relief up to 20% so any additional UK tax payable in excess of this will be an extra cost.
Annual Tax on Enveloped Dwellings
The annual chargeable amounts are being increased by 10.1% for the year April 2023 to April 2024. This is an inflationary increase for the annual charge paid by some companies holding unlet UK residential property.
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