21/22 Property Investor Tax Update

21/22 Property Investor Tax Update

This article will provide a quick update on tax for year commencing 6 April 2021 and the impacts on property investors.

England, Wales & Northern Ireland General Tax Updates

• The personal allowance has increased to £12,570.

• The dividend allowance remains at £2,000.

• The basic rate limit increases to £37,700.

• Higher rate threshold £50,270.

• Employer and employee National Insurance Contribution (NIC) thresholds have changed to £170 per week for employer NICs and £184 per week for employees.

• The upper earnings limit for employees increases to £967 per week, or £50,270 per year.

Optimal Limited Company Director Salary From 6 April 2021​

• £8,840 per annum*:

• No requirement to pay employer’s NI (as at the secondary threshold).

• No requirement to pay employee’s NI (lower than the primary threshold).

• Still earns you credits towards state pension (above the Lower Earnings Limit).

• Assuming no other income this amount is less than the tax-free Personal Allowance threshold (£12,570).

*increases to £9,568 per annum if two or more directors in company due to employment allowance:

Additional 2% Stamp Duty Land Tax charge for non-UK residents

• From 1 April 2021, a new 2% surcharge is added to the standard rates of SDLT for non-UK residents purchasing residential property in England and Northern Ireland.

Extension of the COVID-19 SDLT 'holiday'

• The temporary increase in the nil rate band of £500,000 for residential purchases in England and Northern Ireland has been extended until 30 June 2021.

• This will decrease to £250,000 between 1 July 2021 to 30 September 2021. It will return to the standard amount of £125,000 on 1 October 2021.

• First Time Buyers’ Relief (which has no effect while the nil rate band is £500,000) will resume on 1 July 2021.

No Change to Capital Gains Tax

No Immediate change to Corporation Tax but will rise to 25% from 2023*

*for companies with profit > £50,000 CT will gradually increase from 19% to 25%. This therefore won't impact majority of limited companies.

If you need help understanding how these changes impact you specifically then please get in touch with us.

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