Autumn Budget 2022: Affect on property
We’ve been eagerly anticipated conservative Autumn budget 2022. With high inflation, higher cost of living (utilities, food, fuel etc.) we were expecting some reassuring news for the housing market & stamp duty. See spring Budget 2021: Upbeat Property Focus for previous plans.
Capital Gains Tax (CGT)
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!
Stamp Duty
Stamp duty cuts introduced in Kwasi Kwarteng’s mini Budget on the 23rd September 2022 will remain in place, Chancellor Jeremy Hunt confirmed today, but only until 31st March 2025. Basically the lowest threshold rate at which homebuyers pay SDLT has increased from £125,000 to £250,000 saving buyers a upto £2,500.
It is hoped that with the freeze in place mortgage providers will be more flexible with their rates…
Special privilege has been afforded to first time buyers (FTB) who get additional relief with the price they start to pay stamp duty set at £425,000, so long as the overall property price is below £625,000. This offers first-time buyers a tax saving of up to £11,250. The previous threshold at which first-time buyers started to pay stamp duty was £300,000.
In his role as pandemic chancellor, Prime Minister Rishi Sunak introduced a stamp duty holiday to stimulate the property market. Waiving the property purchase tax up to £500,000 gave all home buyers a discount of up to £15,000.
The break lasted for almost a year between July 2020 and June 2021, when the benefit started to taper off. Property transactions boomed but the tax break was also blamed for inflating house prices.
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 2022 Autumn budget?