Autumn Budget 2024
We’ve been eagerly anticipated labour Autumn budget 2024. With inflation at the 2% target, yet, higher cost of living (utilities, food, fuel etc.) we were expecting some reassuring news for the housing market & stamp duty.
Chancellor Rachel Reeves’ Budget statement this afternoon highlighted tax hikes for both working individuals and British businesses.
She told the Commons that the Budget will raise taxes by £40bn with an approach that she believes will achieve growth in the near future.
Reeves shared projections from the OBR, which said CPI inflation will average 2.5% this year, 2.6% in 2025, then 2.3% in 2026, 2.1% in 2027, 2.1% in 2028 and 2.0% in 2029.
Reeved also said the OBR has published a detailed assessment of Labour’s policies for the next decade.
Listing its forecasts, she announced that real GDP growth will be 1.1% in 2024, 2% in 2025, 1.8% in 2026, 1.5% in 2027, 1.5% in 2028, and 1.6% in 2029.
National Insurance
There was bad news for employers, as Reeves announced that National Insurance contributions by employers will rise from 13.8% to 15%.
In addition, the threshold at which businesses start paying National Insurance on a workers’ earnings will be lowered from £9,100 to £5,000.
Capital gains
The rates on residential property will remain at 18% and 24%.
In order to ultimately keep people in much needed and affordable private rented homes, we continue to stress the importance of support for the private rented sector including incentives for landlords to invest rather than continuing to penalise them through regulatory bombardment and increasing costs. Amongst the headlines today’s budget 2022 was the hotly anticipated reduction to the tax-free allowance for Capital Gains Tax (CGT). It will be reduced from £12,300 to £6,000 from April 2023 and ?3,000 from April 2024. This could provoke turbulence if enough landlords decided this is a disincentive too far.
The result of this change means landlords who report their tax via their personal tax return each year as appose to limited company structures, will pay 18 per cent on any capital gain over these new lower threshold if they are basic rate tax payers, and 28 per cent for those who are “higher rate”.
The overhaul means that, ultimately, second-property owners will pay £2,600 more tax.
A second-home owner selling up after April 2024 will have to pay an extra £2,604 in capital gains tax, assuming their taxable profits exceed £12,300. If they sell up in the 2023-24 tax year, they will have to pay an extra £1,764 compared with today!
With a growing disparity in the number of private rented homes available against a backdrop of increasing demand from tenants. Therefore, it is disappointing to see that the UK Government did not address this fundamental issue in its Autumn Budget and instead has announced yet another blow for landlords by increasing capital gains tax.
The private rented sector plays a crucial role in housing the nation with over 4.6 million homes in England alone, therefore it is imperative that the UK Government does not continue to push landlords out of the market.
Inheritance Tax
Reeves said she will extend the inheritance tax threshold freeze for a further two years to 2030.
That means the first £325,000 of any estate can be inherited tax-free, rising to £500,000 if the estate includes a residence passed to direct descendants, and ?1m when a tax free allowance is passed to a surviving spouse or civil partner, she said.
She added that she will bring inherited pensions into inheritance tax from April 2027.
Stamp duty
Reeves announced that the government will increase the stamp duty land surcharge for second-homes by 2% to 5% from tomorrow. The overhaul means that, ultimately, second-property owners will pay £2,600 more tax.
The extra 2% cost on buying second homes and investment property will reduce demand from second home buyers and investors. Second home buyers are already responding to last year’s Budget which allowed councils to charge double council tax for second homes. This is resulting in a higher level of selling by second home owners.
Threshold at which first-time buyers pay the tax will also drop back, from £425,000 to £300,000.
Point at which house buyers start paying stamp duty on a main home to drop from £250,000 to £125,000 in April, reversing a previous tax cut.
A return to previous stamp duty thresholds from April 2025 will result in an additional 20 per cent of first-time buyers being liable to pay stamp duty and a further 14% will be required to pay a partial amount. The impact is felt across London and the South East in markets with average house prices over £425,000. This will increase costs for buyers by an average of £5,600 in London and £1,390 in the South East. In parts of London with home values over £600,000, FTB could pay an additional £15,000 in stamp duty.
Right to Buy discounts
The chancellor is slashing the ‘right to buy’ discount given to those purchasing their council home.
New homes
The chancellor says the government will invest more than £5bn to deliver their housing plan.
Affordable housing
She added this Budget will increase the Affordable Homes Programme to £3.1bn, provide ?3bn worth of support and guarantees to increase the supply of homes and support small housebuilders.
Ultimately the property market sustains thousands of jobs, including tradespeople, removal companies and suppliers of white goods, and supports a thriving property market for years to come.
What are your thoughts on the Autumn budget 2024?
