email: info@ebsfs.co.uk
Tel: 01494 817161

Articles

Is it the start of the end for Buy to Let?

By Miles Burr | 12th April 2019

For many years investment into buy to let property has generated very good returns as the housing market has risen inexorably and this has clearly attracted many people.

However, are we now beginning to see the end in sight for this type of investment? There is clearly a housing shortage and in order to help tackle this problem, the Government is taxing investment property owners more heavily.

These include increases to Stamp Duty and Capital Gains Tax as well as changes in Mortgage Interest Relief, eating into the income some landlords are able to generate from their buy-to-lets. These changes in taxation for buy-to-let investors are some of the most significant for many years and only time will tell whether they will have the impact the Government desires.

At the same time, the ISA allowance remains generous and the flexibilities on pension savings appear to have made an impact on investment veering away from Buy to Let.  

Pensions, ISAs and Investment Accounts are more attractive from a tax perspective, thanks to lower Capital Gains Tax (CGT) rates on Investment Accounts (with ISAs and Pensions being sheltered from tax). When you consider that this year’s annual ISA limit is still a generous £20,000 per person, enabling investors to build up a significant pool of tax-free assets, you can see why buy-to-let is perhaps not looking as attractive as it once did, especially for new investors.

The tax changes highlighted above mean that many landlords now start at a disadvantage, relative to those putting money into other investments. As an asset class, property has always been considerably more illiquid than, for example, listed equities and bonds. In a market downturn it can take a long time to sell a house. It is also wise for landlords to keep some cash aside to cover unexpected repair bills and rental voids (i.e. periods when you don’t have a tenant). This ties up money that could otherwise be put to work.

Whilst we totally accept that property has been a very successful investment over the years, there are now more obstacles in the path of buy-to-let investors than ever before. By starting on the ‘back foot’, and given the tax implications, property will need to significantly outpace other investments over the longer term to deliver potentially better net returns.

Recent articles

A chance to make a difference as the new Tax Year arrives

By Miles Burr | 12th April 2019

The new Tax Year is upon us and we have a few allowance changes to consider, not least the continued tapering of the Residence Nil Rate Band. This was introduced in 2017, honouring a key commitment in the Tory Manifesto back in 2015 to improve the opportunity of leaving the family home to your children in your will…

Timing the Market or Time in the Market

By Miles Burr | 18th February 2019

Until such time as an investment proposition is created that has all the potential performance of stock market related funds but with the downside risk of a Building Society account, we have to accept that fluctuating stock markets are part and parcel of medium to long-term investing. Whilst market downside volatility creates unease, it is…

The Modern Personal Pension

By Miles Burr | 14th February 2019

Pension Freedoms have now been with us since 2015 although it’s only more recently that many people are starting to recognise that the modern Personal Pension plan can probably describe itself as one of the most tax efficient and flexible investment plans ever! Before 2015, the traditional Personal Pension had strict requirements as to how…

Pound coins

Autumn Budget 2018 – Key Points for Savers & Investors

By Tim Benson | 20th November 2018

Autumn Budget 2018: Key Points for Savers & Investors Income tax Personal Allowance will be increased to £12,500 on 6 April 2019 for the 2019-2020 tax year. The threshold above which higher earners start paying 40% tax is being increased to £50,000. These allowances will remain the same for 2020/21 and then increase in line…

Hands linked together

The Value of Financial Advice – Independent Research that supports our work

By Tim Benson | 18th July 2018

We work closely with our clients to help them achieve their financial objectives. We have always believed in the value of good financial advice and it is encouraging when independent research supports our opinion. The International Longevity Centre recently produced some research, they are a charitable organisation focusing on some of the biggest challenges facing…

Young family outside house

The Residence Nil Rate Band

By Tim Benson | 18th July 2018

One of the key commitments in the Tory Manifesto back in 2015 was the ability to leave the family home to your children in your will without it incurring Inheritance Tax. The Government recognised that property price increases had pulled many more people into the Inheritance Tax net than before. The aim, therefore, was to introduce…

Coins in a budget jar

There may be no Budget, but we still get allowance changes

By Tim Benson | 18th July 2018

March commences and we have the traditional daffodils appearing, clocks will be going back and the final push of snow disappears as the ‘Beast from the East’ slips away. But, it seems that one of the March traditions has ceased for the time being as the Treasury have confirmed that the Spring Budget will be…

Employee Benefit Solutions Ltd. - Logo

Employee Benefit Solutions Ltd.

St. Johns House,
18 St Johns Road,
Penn,
Buckinghamshire,
HP10 8HW

T: 01494 817161
E: info@ebsfs.co.uk
W: www.ebsfs.co.uk

Personal finance society logo

Authorised and regulated by the Financial Conduct Authority.