Tax & Finance

Wales

Summary

The private rented sector (PRS)  now provides a home for one in five UK households. Buying a home is out of reach for many people and the demand for private renting is set to increase. The Royal Incorporation of Chartered Surveyors (RICS) estimates that 1.8 million new homes to rent are required by 2025.

Despite this, little is being done to create a pro-growth tax environment for the sector. In fact, the tax environment is actively dissuading landlords from investing in new properties or releasing old ones for purchase.

The majority of PRS accommodation is supplied by ordinary people who own one or two properties, investing as an alternative to a pension. Government policy has undermined the confidence of private landlords. Recent tax changes, including restrictions on mortgage interest relief and an additional 3% surcharge on stamp duty have deterred investment by landlords and stalled the whole housing market.

Our policy

We are calling on the Welsh and UK Governments to look at:

  • Ending the Land Transaction Tax (Wales' version of stamp duty) levy on additional homes where the property is adding to the net supply of housing. This includes bringing empty homes back into use, converting commercial buildings to residential, developing new properties or converting larger properties into smaller, more affordable rental properties.
  • Reducing the capital gains tax (CGT) rate for the sale of residential properties so that landlords are not put off from selling properties to tenants.
  • Scrapping the changes to mortgage interest relief (MIR).

Making tax digital

The UK Government has committed to introducing a new digitised process for submitting your taxes. The new approach called Making Tax Digital, includes keeping digital records and using software to submit tax returns. This already covers VAT, however plans to extend it to income tax have been delayed. We successfully lobbied to Government for this, raising concerns about how quickly landlords would need to comply.

The Government has recently announced that Making Tax Digital will be extended to VAT-registered businesses with turnover under £85,000 from April 2022 and self-employed businesses and landlords with annual business or property income above £10,000 from April 2023.

Some landlords have been involved with a pilot test of the service for income tax. If you would like to participate in the pilot, you can find out more here.

Latest news

Capital Gains Tax & the PRS - negative impacts on the property market

Research which reports on the impact of Capital Gains Tax. CGT traps landlords into holding property longer than planned. In doing so, the tax holds back a functioning property market. The tax reduces property investment as well as the volume of properties available to purchase.

Deep Insight Nick Clay 22/10/2019
Capital Gains Tax & the PRS - negative impacts on the property market

Related Documents

Tax

Last Updated: 24/07/2020

What landlords need to know about tax

Recent tax changes that affect your self assessment

Last Updated: 27/07/2020

What changes will affect your self assessment

Share your story

John Stewart

John Stewart Deputy Director of Policy and Research

John is the Deputy Director of Policy and Research for the NRLA. He has over 20 years experience working in politics, as a successful election agent, MP’s assistant, local councillor and council leader, and is a former charity chief executive.

He oversees NRLA policy work across all levels of government – central, devolved and local – working to ensure that landlords’ views are represented and officials, MPs, Assembly Members and local councillors have key information and evidence about the PRS before they take decisions.

See all articles by John Stewart