James Allen, head of Walker Crips Alternative Investments comments on yesterday's budget announcement.
In the summer of 2016 the Government introduced legislation that ensured offshore developers did not have an unfair tax advantage over their onshore competitors. Anti-forestalling rules applied to transactions after March 2016, but it now looks as though the government will introduce an amendment so that earlier contracts are also caught by the new taxation system. The simplest way to effect this would be to add the disposal date as one of the tests of whether the new rules apply, but too often legislation is not as simple as it could be.
Although I support the levelling of the taxation playing field, the Chancellor should have focused on forcing developers to develop land within the time limit granted by planning permission or face penalties for inaction.
There has been an increasingly significant drop off between the amount of housing that is granted planning permission and the amount that actually gets built. It is the provision of new housing and implementation of affordable housing within larger development schemes which could address under supply, but instead the Government is consulting on a ‘rent a room’ scheme to encourage Britons to become long term lodgers.
This was an opportunity to address the under supply of housing without having to make major changes to existing frameworks, so it is a shame that yesterday's measures tinker around the edges.
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It is important to remember that the value of investments can go down as well as up and it is possible to get back less than you invested, especially in the early years. Past performance is no guarantee of future returns and interest rates and dividends are variable and cannot be guaranteed in the future. Any tax treatment mentioned is based on personal circumstances and current legislation which is subject to change.