South West has little to cheer about in spring Budget

There was little news or announcements for the South West in this year’s budget.

What schemes were announced were in other parts of the UK including the North East and perhaps most notably Canary Wharf.

One measure which will have an impact in the region is the changes to the rules around taxation on second homes.

Jeremy Hunt abolished the furnished holiday lets  regime rebalancing the tax treatment of holiday lets compared to long-term rentals.

Toby Tallon, Tax Partner at professional services and wealth management group Evelyn Partners, said:  “Currently, many second home-owners and landlords who use the furnished holiday letting regime can deduct the full cost of their mortgage interest payments from their rental income and, potentially at least, pay lower capital gains tax when they sell.”

About 127,000 properties in the UK are registered under an FHL regime that will now be removed.

Toby Tallon said: “We are not sure yet when this will kick in, but it does seem to level the playing field with the tax treatment of long-term rentals so that for buy-to-let landlords there will be less of an incentive to opt for short-term lettings over renting to long-term residents. It’s obviously hoped this will help redress the balance in areas where there is a rental housing bottleneck for local residents and workers.

“For second home-owners who like to make extra money out of their holiday home by putting it on AirBnB while they are not using it, it will simply make this a less lucrative ‘side hustle’. If that is a make-or-break issue for them and they don’t want to be long-term private landlords, then we could see some of these properties being sold.”

Predictably Labour’s West of England mayor Dan Norris was highly critical of the budget.

Dan Norris

He said: “Hard-pressed West of England residents and businesses are still struggling with seventy-year high levels of tax under the Conservatives, despite today’s desperate attempts from the Chancellor to pretend otherwise. Instead of short-term election bribes designed to try and save Conservative seats, our region needs the long-term stability, investment and reform that Keir Starmer and Rachel Reeves are offering.”

Rob Stokes, director of Swindon based Optimum Professional Services , said there were very few surprises and those measures designed to help businesses or put money into people’s pockets were limited.

He added: “There was nothing for small businesses and the Budget was a non-event.”

Ed Rimmer, chief executive of Time Finance

Ed Rimmer, the chief executive of Bath based Time Finance, said: “We’re seeing some real signs that business confidence is returning, mirroring the Chancellor’s sentiments , and this gives us some encouraging signs that growth will accelerate, albeit steadily if the OBR’s predictions are correct. Optimism is a huge factor in success, and our economic strength is dependent on business confidence.

“The OBR’s predictions that inflation will fall lower than the 2% target in a few months will be very welcome news. Inflation and high interest rates have – over the past 18 months – taken businesses, and families, along a very bumpy road, but there is a real sense that these challenges will soon be behind us.

“Beyond this, businesses, particularly those in the creative and tech industries, need to hear more from the Government on how it plans to build a high skilled economy.  Cultivating innovation requires investment in skills, and this was missing from today’s Spring Budget.”

Paul Falvey, partner at BDO in the South West, said: “Despite being pitched as a Budget for long-term growth, there was very little for business. The only obvious winner being the creative industries. Employers will welcome the measures announced today around lifting the child benefit threshold to £60,000 as it will help employees. For smaller businesses, lifting the threshold for VAT registration to £90,000 will be popular despite being limited. The proposed extension of full expensing to leased assets may also encourage investment by businesses in the region.

“It will be interesting to follow the consultation around the “British” ISA which could bring an additional £5,000 tax free allowance for individual investors but should also help to stimulate investment in regional growth businesses across the UK.”