The UK’s first female Chancellor has spoken in what is Labour’s first Budget for 14 years. A raft of financial measures aimed at protecting working people, fixing the NHS and rebuilding Britain were unveiled by Rachel Reeves.
It’s probably not as bad as expected, but there are still a few elements that will have a significant impact on investors. Reeves outlined a £40bn tax increase to end "short-termism" and drive long-term growth within the UK economy.
Key updates for Investors & landlords include changes to Capital Gains Tax (CGT), Stamp Duty, and National Insurance.
The chancellor has announced a Stamp Duty hike for second-home buyers and landlords. Rachel Reeves announced in her Budget yesterday that the additional Stamp Duty rate will rise from 3% to 5%. It will start from today.
What changes were announced for housing in the Autumn Budget?
Housing announcements included £5 billion government investment to deliver Labour’s housing plan, with a £500 million boost to the Affordable Homes Programme. Investment is planned for sites across the country, such as Liverpool Central Docks, with 2,000 new homes and a transformation of the waterfront.
There will also be £25 million put towards the delivery of 3,000 energy-efficient new homes across the country, with a target of 100% of these being affordable.
The government has also pledged to engage with industry on plans to make the Mortgage Guarantee Scheme permanently available to support lending at 95% loan-to-value.
Stamp duty Inceases
There was no mention in yesetrdays Budget of the extension to the current stamp duty relief for first-time buyers, which is due to end in March 2025.
The Stamp Duty Land Tax (SDLT) surcharge on second homes and investment properties will increase from 3% to 5% in an effort to support more than 130,000 additional transactions from people buying their first home, or moving home, over the next five years. While this measure is anticipated to narrow part of the exit market, it will also support home ownership by shifting demand away from investors and towards those purchasing primary residences.
Capital Gains Tax remains unchanged
We saw some trends emerge in the housing market in the run up to the Budget, off the back of several anticipated changes. One of these talked-about changes was an increase to Capital Gains Tax, which could have seen landlords pay increased tax on any income made from rental properties.
For higher rate taxpayers, this will rise from 20% to 24%. For lower rate taxpayers, it will rise from 10% to 18%. On residential property, the rates will remain at 24% and 18%.
Employers’ National Insurance contributions
National Insurance contributions by employers will increase from 13.8% to 15%. Meanwhile, the threshold at which businesses start paying National Insurance on workers' earnings will be reduced from £9,100 to £5,000.
Income Tax and National Insurance
The Government will not extend the freeze on Income Tax and National Insurance thresholds beyond 2028. From 2028-29, personal tax thresholds will be uprated in line with inflation.
Inheritance Tax
Reeves says she will extend the Inheritance Tax threshold freeze for a further two years to 2030. So, the first £325,000 of any estate can be inherited tax-free.