Chancellor Rachel Reeves recently introduced the autumn budget of 2024, the first Labour Budget in 14 years. As a landlord or property owner, staying up to date with the tax landscape in this latest budget is essential so you know how this impacts your tax situation and how to stay compliant. While some areas of taxation remain unchanged, the autumn budget does introduce some new measures designed to tackle a £22 billion shortfall in public finances.
Among the key announcements are measures that will increase taxes by £40 billion; this makes the recent budget a substantial tax-raising change introduced by the government.
Our team has been analysing the changes brought to guide landlords through the autumn budget. Below, we provide an overview of the key updates and what they could mean for property owners and landlords.
Increase in Stamp Duty Land Tax (SDLT)
An increase in Stamp Duty Land Tax has been effective since the 31st of October 2024; as part of this, the SDLT surcharge on second homes and buy-to-let properties has been hiked from 3% to 5%. While the government claims this measure will curb demand for additional properties and improve accessibility for first-time buyers, it significantly increases the financial strain on landlords as well as on property investors.
For instance, a landlord purchasing a property for £200,000 now faces an inflated SDLT charge of £10,000, compared to £6,000 under the previous rate.
The increase in the SDLT surcharge will undoubtedly affect the buy-to-let market as the changes impose a heavier financial burden on landlords seeking to acquire additional properties, discouraging investment and potentially shrinking the availability of rental housing. Many would-be landlords may now be thinking twice, particularly on high-value property purchases. This reduction in supply could worsen existing shortages in the rental market, driving rents even higher and potentially creating further challenges for tenants already struggling with affordability.
Non-UK residents purchasing residential properties in the UK should note that a 2% surcharge still applies in addition to the new SDLT rates. The effective surcharge for non-residents is, therefore, now 7%. This measure will be likely to dampen demand from international property investors.
Stamp duty land tax does not apply in Scotland and Wales, which operate different property purchase tax systems.
Changes to Stamp Duty Thresholds
The current SDLT relief for first-time buyers, which exempts them from paying stamp duty on properties up to £425,000, is set to revert to £300,000 after 31 March 2025.
The general SDLT nil-rate threshold will decrease from £250,000 to £125,000. These adjustments will result in higher tax liabilities for property purchases completed after these dates, potentially influencing market activity, as buyers and investors may hurry to complete purchases to benefit from the existing thresholds.
Capital Gains Tax (CGT) Adjustments
If you’re a landlord in the UK, the recent budget changes to Capital Gains Tax could have an impact on your investments. Starting next year, the rates for CGT will increase. For basic-rate taxpayers, the rate on property sales is going up from 10% to 18%, while higher-rate taxpayers will see their rate rise from 20% to 24%. If you’re selling a residential property, the rate will now be a flat 24%, which means you’ll take home less from any profit made on a sale.
On top of that, the annual tax-free allowance is being cut. From April 2024, it will drop from £12,300 to £6,000; by April 2025, it will go down even further to just £3,000. This means a much more significant chunk of your capital gains will be taxed if you decide to sell your asset.
For many landlords, this raises important questions about timing and strategy. If you’ve been considering selling a property, acting sooner rather than later might make sense to avoid a higher tax burden. At the same time, for those planning to hold onto properties long-term, you may need to rethink your approach.
These changes are clearly aimed at generating more tax revenue from property owners, but they also add complexity to managing a property portfolio. If you’re unsure about how these changes will affect you personally, now is the time to get advice.
Business Property Relief Cap
The autumn budget brings significant changes to Business Property Relief (BPR), including the introduction of a £1 million cap on the value of business and agricultural property eligible for 100% relief. Starting in April 2026, any property value exceeding this threshold will qualify for only 50% relief, leaving a portion of your estate subject to inheritance tax (IHT). For landlords with substantial assets, this reform highlights the importance of reassessing your holdings and understanding how the changes could affect your estate planning strategies.
Additionally, from the same date, Alternative Investment Market (AIM) listed shares, which previously qualified for 100% relief, will only receive 50% BPR, regardless of their value. This adjustment could influence your investment decisions, particularly if you’ve relied on both property and AIM-listed shares as part of your estate planning.
What is the conclusion from our accounting team?
All in this budget will increase taxes on landlords and property investors as that is what the changes are designed to do.
The increase in the stamp duty land tax surcharge raises the upfront costs of purchasing additional properties, potentially discouraging investment in the rental market. Additionally, upcoming changes to SDLT thresholds may prompt a short-term spike in market activity as buyers rush to complete transactions before the new rates take effect. For those planning their estates, the new cap on business property relief adds complexity, requiring property owners to reevaluate their strategies to minimise inheritance tax burdens.
Landlords will have to manage increased tax obligations. While the measures aim to address housing affordability, landlords must adapt to these new changes to manage them effectively. At this stage, seeking professional advice is crucial for navigating how the budget impacts you.
At Freedom In Numbers, our team provides comprehensive accounting services tailored to the unique needs of property investors and landlords, helping you to stay compliant, optimise your tax position, and protect your investments.
Our expert accounting team is here to relieve any stress that you may have and to guide you through these new tax measures, ensuring that you can adapt.
If you’re unsure how the latest budget changes will affect you, get in touch with us today. Let us help you to navigate the shifting tax landscape while you focus on maximising your property investments and achieving your financial goals.
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