This year's Autumn Budget was Labour's first budget in almost 15 years. It has been highly anticipated what the budget will mean for the public and the ongoing economic challenges we've seen over the last few years.
Chancellor Rachel Reeves presented the budget to the House of Commons on the 30th of October, and there was a lot to unpack.
Tax has been the focal point leading up to the budget, namely that Labour are needing to raise tax in an attempt to fill the so called 'black hole' of £22bn they claim to have inherited from the previous government.
The biggest relief is that the budget is over, meaning no more anticipation nor speculation. Here are some key takeaways from this year’s Autumn Budget.
Stamp Duty Land Tax (SDLT) changes for second homes
When you purchase a property you need to pay SDLT, whether or not you are purchasing with the help of a mortgage.
How much you pay depends on the value of your property and how many other properties you own.
There is currently some SDLT relief in place for first time buyers and single property owners, (introduced by the previous Government in September 2022) and this is due to end by the end of March 2025. This was not mentioned in today’s budget, the implication being that it will, as planned, come to an end in March 2025.
What was announced was an immediate increase in the Stamp Duty payable on second properties. If a property purchase means the buyer will own more than one, they are already liable for 3% more Stamp Duty than someone who will own just one. From tomorrow (31st October), this will increase to 5%.
This has come as somewhat of a surprise, in particular as it’s coming into effect just one day after the budget was announced.
This will likely affect homeowners looking to invest in a second property, whether for residential, recreational or letting purposes, and landlords who are expanding their portfolios the most.
Purchasing property remains a sound investment in the long term, and with Rightmove reporting there were 19 applicants per property in October 2024 there is still real demand for rental properties across the UK.
If you would like to discuss how this could affect your plans, get in touch with your local experts here.
Capital Gains Tax explained
When you sell an asset, such as a property, at an increased value to how much you originally paid for it, you may have to pay Capital Gains Tax on your earnings.
Currently you won't have to pay any Capital Gains Tax (CGT) if:
- Your property is the only one you own, and you've lived in it the entire time you've owned it
- You have not let the property out, either partially or fully
- You have not used part of your home for business purposes (excluding using a room as a temporary or occasional office)
Labour's budget has revealed they will be increasing CGT for non-residential assets, such as stocks and shares, with the lowest rate increasing from 10% to 18% and the higher rate from 20% to 24%.
Crucially there will be no changes to CGT for residential property, meaning the current rules will remain in place. This may encourage some Landlords not to exit the Private Rental Sector, which is positive news for the much needed supply of rental property.
Affordable Homes Programme
With an additional investment of £500m for the Affordable Homes Programme, and taking it to over £3bn and further support for small housebuilders, the Government are pledging support to improve the supply of housing in the UK, which is much needed.
Inheritance Tax remains unchanged
Inheritance Tax is due on assets when they are inherited when their original owner passes away. This includes savings, physical assets (such as property) and investments.
As it stands the first £325,000 of an estate can be inherited without needing to pay tax, and this rises to £500,000 when the estate includes a residence passed to direct descendants.
These thresholds had been frozen until 2028 by previous Prime Minister Rishi Sunak, and there was some anxiety around whether Labour would uphold this freeze.
However this worry was for nothing, as Rachel Reeves has elected to extend this freeze to 2030.
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