The Chancellor of the Exchequer, Rachel Reeves, unveiled her much-anticipated Autumn Budget, bringing significant insights into the government’s approach to balancing fiscal responsibility with economic growth. As the first Labour government in over a decade, this budget sets the tone for the next several years, signalling a “new beginning” that seeks to manage tax levels, stimulate development, and support working families.
Let’s dive into the key points of the Autumn Budget, focusing on how these changes could impact property investors in the months ahead.
A Snapshot of Tax Changes
Capital Gains Tax (CGT): While the CGT rates for residential properties remain at 18% (lower) and 24% (higher), CGT on other assets like shares and crypto is set to rise, with rates increasing to 18% and 24% respectively. By 2025, carried interest tax rates will also see an increase to 32%. These adjustments, though slightly raising taxes, keep UK CGT levels among the lowest in the G7.
Corporation Tax: Property investors using a limited company structure continue to benefit from favourable conditions, as corporate tax rates remain capped at 25% until at least 2029. This provides a viable route for investors to navigate rising personal CGT rates.
Inheritance Tax: Labour’s decision to extend the inheritance tax freeze until 2030 retains current thresholds, including a £325,000 inheritance tax-free allowance that rises to £1 million when passed to a spouse or partner. This may encourage property investors to explore trust arrangements as a strategy for estate planning.
Housing Initiatives and Incentives
In line with Labour’s commitment to affordable housing and green energy standards, several notable provisions focus on the housing market:
Stamp Duty and Mortgage Rates: First-time buyers continue to enjoy stamp duty relief on properties up to £250,000. However, the stamp duty surcharge for second homes will increase from 3% to 5%. Meanwhile, mortgage rates may see a minor reduction post-Bank of England's November meeting, potentially easing borrowing costs for homebuyers.
EPC Ratings and Green Standards: Labour has pledged to enforce stricter energy efficiency standards, requiring properties to have an EPC rating of C or higher by 2030. This move presents additional costs for landlords who will need to invest in upgrades to comply.
Development and Affordable Housing Support: Labour’s ambitious target of 1.5 million homes by 2029 gains momentum with a £3.1 billion boost to the Affordable Homes Programme, tax relief incentives, and eased planning restrictions on brownfield sites. The aim is to catalyze urban development, making way for smaller developers and encouraging sustainable growth in the housing sector.
Key Takeaways for Property Investors
For UK property investors, this Autumn Budget is a mixed bag. On the one hand, CGT and stamp duty changes present challenges for individuals holding second homes or buy-to-let properties. Yet, for those investing through limited companies, the corporation tax rate cap offers stability, while development incentives bring new opportunities for affordable housing investments. Labour’s continued support for energy efficiency aligns with the broader push for sustainable property management, adding cost but enhancing long-term property value.
In conclusion, the 2024 Autumn Budget introduces strategic changes that cater to Labour’s goals of affordable housing, energy sustainability, and economic growth. Property investors, particularly those in buy-to-let markets, will need to adapt to rising taxes and evolving regulations. However, opportunities abound for those who can navigate the changing landscape, especially through development investments and corporate ownership structures. As always, preparation and adaptability will be key in leveraging these shifts to optimise property portfolios.
Original Source
BBC Live Budget – https://www.bbc.co.uk/news/live/cp9zrg128get