GUEST BLOG: Budget 2017 summary from Sara Maccallum of boodle Hatfield

1 December 2017

Budget 2017: What were the key takeaways for the industry? This bulletin from Sara Maccallum, Senior Partner at Boodle Hatfield, summarises everything you need to know.

After a turbulent year, electorally speaking, our Chancellor "Fiscal" Philip Hammond delivered his Autumn 2017 Budget to a packed house this afternoon. Given the sharp drop in the growth forecast for this year (from 2% down to 1.5) our Chancellor managed to scrape out a few more "sweets" from the bottom of his budgetary jar than many would have expected. On top of the usual loudly trumpeted freeze on beer and fuel he offered a few other treats. These included increases in the Personal Allowance and Basic Higher Rate band for Income Tax, £6.3 bn of extra funding for the NHS and a range of hand-outs aimed at increasing computer literacy, the study of mathematics and technological advancement. The establishment of a £3bn Brexit fund to help build that "Deep and Special Relationship with our European Partners" was greeted from practically all sides of the House with expressions of grim resignation.

A key focus of the Chancellor was a drive to solve the Housing Crisis with a range of measures from providing funds for building new dwellings to consulting on potentially quote drastic changes to the planning rules (compulsory purchase orders were mentioned multiple times). A headline grabber for the newspapers tomorrow is likely to be the "abolition" of SDLT for first-time buyers though as discussed below this change is in reality very limited in scope. In terms of the tax issues of interest to those in the property and business world the more significant items are listed below:

Taxation of UK property owners

Consultation announced regarding further tax on gains made by non-UK tax residents on UK land

  • Currently, Non-Resident CGT (NRCGT) is only payable where non-UK resident entities dispose of an interest in UK residential land. The Government is now consulting on extending tax on land related gains so that it applies to non-residential property. This means gains made by non-UK tax residents on such property will be charged to NRCGT or corporation tax. This effectively extends the NRCGT regime to commercial property. There will be rebasing of commercial land from the beginning of April 2019 meaning that historic gains will not be caught.
  • Currently, only "closely held" companies are in the scope of the existing NRCGT (i.e. broadly speaking this means companies owned by 5 or fewer shareholders together with their associates). The consultation envisages bringing widely held companies into the scope of tax on both residential and commercial land, again on gains accruing from April 2019. This will effectively bring all corporate owners into the scope of NRCGT.
  • The government is also bringing in a gains tax charge for indirect disposals of land i.e. if the non-resident sells an interest in a property rich vehicle. Tax will therefore bite whether the vehicle (often a non-resident company) sells the land or the shareholder sells the shares in the vehicle. This element of the new charge is targeted at those who own 25% or more of the vehicle in question (the ownership hurdle will require connected and related party interests to be amalgamated). It is likely that much of the discussion around the consultation will be in this area.
  • The changes are intended to come into effect from April 2019. There is an anti-forestalling rule being introduced from today to try and stop people seeking treaty benefits for their assets between now and April 2019.

This is a significant announcement for the property tax regime as it applies to offshore investors. Any non-resident owners of UK residential or commercial property could be affected by the new rules and so should seek advice.

Other points to note are:

SDLT for First Time Buyers

The chancellor has introduced a limited "abolition" of SDLT for first-time buyers. First-time buyers will not be charged any SDLT on the purchase of residential property for less than £300k. Where the property costs more than £300k but less than £500k the SDLT payable will be limited to 5% on the part of the purchase price above £300k. There is no relief where the property is purchased for more than £500k.

Offshore structure notification requirement consultation

The Government will publish a response to the consultation carried out on a proposal to require businesses or intermediaries creating or promoting certain types of complex offshore financial arrangements to notify HMRC of these structures and the details of their clients using these arrangements.

SDLT 3% Higher Rates amendments

The government has tweaked the rules relating to the Higher Rates of SDLT. In particular, this will remove the SDLT charge where the purchaser is buying a further interest in a dwelling which is their main residence (which it was felt produced unfair results).

SDLT Filing Deadline

The SDLT filing and payment window will be reduced from 30 days to 14 days. This will apply to land transactions with an effective date on and after 1 March 2019.

(a) Taxation of companies and shareholders

Corporation Tax - Indexation Allowance

Corporate Indexation Allowance will be frozen with effect from 1 January 2018. The allowance will be given up to December 2017 and no further. Accordingly, no relief will be available for inflation accruing after this date in calculating chargeable gains made by companies.

Changes to rules on tax reliefs for high-risk investments

  • Relevant for Enterprise Investment Scheme ("EIS") companies, Seed EIS companies and Venture Capital Trusts ("VCT"s). A new condition for these tax reliefs to apply is that there is genuine "risk to capital". This is introduced to ensure that only genuinely high risk high growth companies are eligible for the tax reliefs. The test will be a principles-based test taking into account a range of factors.
  • EIS and VCTs: The Chancellor is introducing more generous treatment of investment into Knowledge Intensive Companies ("KIC"s). Specifically, this entails an increase in the annual investment limit for KICs to £10m and an increase in the EIS investment limit for individuals to £2 million provided that any amount over £1 million is invested in one or more KIC.

Entrepreneurs' Relief Amendment

A consultation is being published on the availability of the relief where an entrepreneur's holding in their company is reduced below the normal 5% qualifying level as a result of raising funds for commercial purposes by means of issues of new shares. This could be a useful tweak to the relief if enacted.

Research and Development Tax Credit

The rate of relief is increasing from 11% to 12% with effect from 1 January 2018.

Disguised remuneration

Amendments are being made to tighten up the rules introduced to tackle disguised remuneration.

We await further details on much of the above. Please contact us if you have questions and it will be interesting to see how the widening of the charging regime for non-resident investors plays out.

Please note that the above update is designed as a summary of measures which are of particular interest to us and our clients and is not designed to be a comprehensive list of all the measures to be introduced.


  • We shake up SDLT and investigate alternative models in place in Singapore and Norway. Read it here >
  • Access more blogs on all things property here >