Although the rate of CGT for high earners increased in the emergency budget, there was good news for landlords who let out their second home as a furnished holiday let.
Unexpectedly, the chancellor stated that they can still offset the cost of furniture and fittings against tax. Additionally, they will pay a reduced CGT rate when they sell up. George Osborne’s decision was welcomed by VisitEngland, the main UK tourism board. The Labour government had intended to remove these tax advantages because they felt they did not comply with EU regulations.
A senior tax partner at Blick Rothenberg said that home owners who let out holiday accommodation are running a business and therefore it was only right that the previous government’s plans were reversed.
However, the budget contained bad news for people who are struggling to avoid repossession.
The Support for mortgage interest scheme will be based on the Bank of England’s average mortgage rate from this October. The rate currently stands at 3.67% and would lead to a substantial cut in the benefit payable which has been frozen at 6.08% since 2008.
The SMI scheme is designed to help homeowners on income support, pension credit or jobseeker’s allowance who are having problems meeting their mortgage interest on loans of up to £200,000.
The financial Inclusion Centre said this could cost households with a £100,000 mortgage about £130 a month.
Meanwhile, mortgage lending was up in May compared to the previous 2 months, according to the BBA. A total of 36,709 contractor mortgages were approved last month. Approvals for equity release also rose by about 800, whilst remortgage approvals declined by 322 to 21,229.
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