Autumn Budget 2024 – Key Points for Private Landlords
Published on October 31, 2024 by Sarah Mac
The Autumn Budget delivered by Chancellor Rachel Reeves on 30 October 2024, the first by the new Labour Party, was billed as ‘the one to boost economic growth’. But what does it mean for landlords?
In this article, we will look at each of the key announcements, and how they are likely to impact landlords and property investors.
Capital Gains Tax (CGT) rate on residential properties will not change
Capital Gains Tax (CGT) is a tax levied on profits made from selling assets, including property.
When landlords sell a rental property, CGT applies to any profit made, so obviously any changes to this tax will make an impact.
In the Autumn Budget 2024, Rachel Reeves confirmed that CGT will increase from 10% to 18% for lower rate taxpayers, and by 4% from 20% to 24% for higher rate taxpayers for disposals made on or after 30 October 2024.
However, these rises only applied to the likes of shares and unit trusts held outside of an ISA or SIPP, and not on residential property which was frozen at current rates, meaning landlords will not be affected should they choose to sell up.
No changes to Income Tax
The remaining 20% tax credit on mortgage payments has remained intact, which will come as a relief to landlords.
Other than the fiscal drag that everyone is subject to with the Income Tax thresholds remaining frozen, there is no change to the rate of taxation.
Stamp duty (SDLT) rises on additional properties
Stamp duty (SDLT) is a tax levied by the Government on the transfer of property or land.
In the spring 2024 budget, the government temporarily reduced SDLT rates. In the autumn 2023 budget, the Government raised the threshold for paying SDLT and provided targeted relief for first-time buyers.
Now, Rachel Reeves has confirmed that the government will not introduce an extension to current rates of first time buyer stamp duty relief, a move that will directly impact first time buyers in from 31st March 2025.
Here are the main points:
- The 0% SDLT threshold for first time buyers will reduce from 31st March 2025 so that purchases over £300,000 will be subject to the tax, while the current threshold is £425,000.
- First time buyers purchasing a home over £500,000 will no longer benefit from any first time buyer’s relief. This threshold is currently £625,000.
- For other home buyers, the stamp duty threshold is reducing from £250,000 to the previous rate of £125,000, meaning SDLT will be payable from a lower purchase price than currently.
For landlords, the news isn’t any better, with a 2% increase from 3% to 5% on second homes and investment properties taking effect from 31st October 2024.
To put this in context, SDLT payable for a landlord purchasing an additional property for £250,000 will rise by £5,000 from £7,500 to £12,500.
There is widespread concern amongst the industry that this move will reduce demand from second home buyers and investors, which will reduce the number of rental properties available.
Employers’ National Insurance (NI) contributions rise
National Insurance (NI) is a tax system in the UK that primarily funds social security benefits, including the state pension, healthcare, and other welfare systems.
Employers’ NI contributions will rise 1.2% to 15% from April 2025. The threshold for paying contributions will also fall to £5,000 from £9,100. Individual NI contributions will not be affected.
To mitigate the rise in employers’ NI contributions, the Chancellor announced an increase to the Employment Allowance from £5,000 to £10,500, which will mean that 865,000 employers won’t pay any National Insurance at all next year, while a further million businesses will pay the same or less than before.
Inheritance tax (IHT) threshold extended, no change to the tax rate
Inheritance Tax (IHT) is a tax on the value of a person’s estate (property, money, and possessions) when they die.
In the autumn budget, Rachel Reeves confirmed that IHT thresholds will be frozen until 2030, allowing the first £325,000 of any estate to be inherited tax-free, rising to £500,000 if the estate includes a residence passed to direct descendants, and £1million when a tax-free allowance is passed to a surviving spouse or civil partner.
The current rate of 40% will also remain. However, inherited pensions will be subject to IHT from April 2027.
Other autumn budget takeaways
- Fuel duty and Corporation Tax frozen
- National Living Wage rises by 6.7% for people older than 21, from £11.44 to £12.21 per hour
- National Minimum Wage rises to £10 an hour for people aged 18 to 20
- Apprentices will receive £7.55 an hour from April next year, an 18% rise
In Summary
The Autumn Budget 2024 aims to boost long-term economic growth within the UK. While there has been no change for landlords regarding Capital Gains Tax, they will be significantly impacted by Stamp Duty rises when expanding portfolios.