Pre Budget Report 2007 - Second home owners score a good news hat trick

Commenting on the implications of yesterday's pre budget report for second home owners, Carolyn Steppler, private client tax director at KPMG in the UK, said

 

"Second home owners, or investors holding buy to let property, scored a hat trick of good news yesterday.

Capital Gains Tax:
At a stroke, from 6 April 2008 the capital gains tax they will pay on taxable profits arising from the sale of a second property is cut by over half, falling 22 percentage points from a maximum of 40 percent to 18 percent. Under the old rules, the capital gains tax bill would reduce the longer the asset was held, to reach a minimum rate of 24 per cent after ten years. Investors no longer have to wait and they get a lower rate than the absolute minimum previously achievable - so they are clear winners here.

Inheritance Tax:
"If the second home owners are a married couple or in a civil partnership, yesterday's pre budget report also held good news. From April next year, they don't have to worry so much about the inheritance tax implications of holding a second property. Now that they are certain to get the benefit of two inheritance tax nil rate bands - an effective doubling of the inheritance tax threshold - they have more room to manoeuvre - another win.

VAT:
"And finally, if a second home owner is taking on an empty property, the Chancellor announced yesterday that from next January they will see the VAT rate they are charged for alterations and renovations cut to five per cent after a minimum of only two years as opposed to the current three.”


KPMG News 10 October 2007


-ENDS- 


Further information:
Margot Cowhig, Tax PR Manager, KPMG in the UK
Tel: +44 207 694 4246
Mobile: 07920 274 856
Mail: margot.cowhig@kpmg.co.uk 


About KPMG:
KPMG is the global network of professional services firms who provide audit, tax and advisory services. KPMG LLP operates from 22 offices across the UK with over 10,000 partners and staff. KPMG in the UK recorded a turnover of £1.45 billion in the year ended September 2006. KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative.