Rishi Sunak, Chancellor of the Exchequer, released his Spring statement on March 23rd 2022. Here’s a summary of the key points and how they will impact landlords
From 2025, the minimum energy efficiency standard for rental properties is set to be increased to C for new tenancies and it will then be extended to existing tenancies from 2028.
The Chancellor announced a cut in VAT for homeowners buying energy-saving materials, i.e. insulation materials, solar panels, heat pumps etc. For the next five years, homeowners will pay zero per cent VAT on materials for improving the energy efficiency of their properties. Not only will this help people to save on energy bills, but make it cheaper for people to install these energy-efficient materials;
The Chancellor’s Statement also featured other announcements designed to address the UK’s ongoing cost of living crisis, including a move to cut the basic rate of income tax from 20% to 19% by the end of the parliament in 2024.
A major announcement that may likely affect most landlords depending on how you own your properties was made in the Chancellor’s tax plan which sees the National Insurance tax threshold increase of £3,000, to £12,570, which works out to be roughly £330 per year per worker, resulting in a £6 billion tax cut across the UK.
What about rental reforms?
The government announced details of widespread rental reforms as part of its levelling up agenda in February 2022. The reforms are set to include:
However, there was no update in the Spring Statement about when these proposals could be introduced.
So whilst landlords may not have been heavily impacted by the Government’s budget adjustments there has been no further clarity on how the private rented sector can address the important issue of energy efficiency.
You can read the full 2022 Spring Statement here, and the Spring Statement Tax Plan, here.
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