Labour’s first Budget in 14 years delivered good news on Capital Gains Tax, although Stamp Duty rises caused concern. Here’s what you need to know...
The Autumn Budget is the second of two yearly announcements on the state of the UK economy.
Today’s Statement — delivered by Britain’s first female Chancellor, Rachel Reeves — is also a landmark moment for Keir Starmer’s Labour Government, which came into power on 17 July 2024, following 14 years of Conservative Party rule.
In this budget, Reeves set out her plans to end “short-termism” and raise taxes by £40bn to boost long-term economic growth.
Here are all the key announcements letting agents and landlords need to know, including updates to Capital Gains Tax (CGT), Stamp Duty and National Insurance (NI).
- Key takeaway 1: Capital Gains Tax
- Key takeaway 2: Stamp Duty
- Key takeaway 3: National Insurance
- Key takeaway 4: Inheritance Tax
- At a glance: other takeaways
- Conclusion
Key takeaway 1: Rate for Capital Gains Tax (CGT) on residential properties will not change
Capital Gains Tax (CGT) is a tax on the profit made from the sale of particular assets, including property. When landlords sell a rental property for more than they paid for it, CGT applies. Here’s everything you need to know about today’s announcements:
What changes did Labour announce to CGT in the Autumn 2024 Budget?
Rachel Reeves has confirmed that the lower rate of CGT will increase by 8%, from 10% to 18%, while the higher rate will increase by 4%, from 20% to 24%.
Although CGT is increasing, the rate on residential properties will not change. This means letting agents and landlords will not be affected if they choose to sell up.
What happened to CGT in previous Budgets?
In the Spring 2024 Budget, the Chancellor announced that the higher rate of property CGT would reduce from 28% to 24%. In Autumn 2023, CGT remained unchanged.
Key takeaway 2: Stamp duty (SDLT) rises on second homes
Stamp duty (SDLT) is a tax levied by the Government on legal documents involved in the transfer of property or land. Here’s what’s changing:
What changes did Labour announce to stamp duty in the Autumn 2024 Budget?
Anyone who plans to buy a second home will be affected by a 5% SDLT, effective tomorrow. The previous rate was 2%.
A higher SDLT could discourage anyone planning to become a landlord from doing so, while it could also discourage existing landlords from expanding their portfolios. This may reduce the availability of rental properties and result in rent hikes.
What happened to stamp duty in previous budgets?
In the Spring 2024 Budget, the Government temporarily reduced SDLT rates and introduced a review mechanism for the tax. In the Autumn 2023 Budget, the Government raised the threshold for paying SDLT and provided targeted relief for first-time buyers.
Key takeaway 3: 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 programs. Here’s what letting agents and landlords need to know about Labour’s stance in this Budget:
What changes did Labour announce to NI in the Autumn 2024 Budget?
Employers’ NI contributions will rise 1.2% to 15% from April 2025. They will also start paying NI at £5,000, rather than the previous threshold of £9,100. Reeves froze individual NI contributions alongside income tax and VAT.
To mitigate the rise in employers’ NI contributions, Reeves announced an increase to the Employment Allowance from £5,000 to £10,500. This will mean 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.
What happened to NI and income tax in previous budgets?
In the Spring 2024 Budget, Class 1 NI contributions were cut from 10% to 8% from 6 April 2024, and Class 4 contributions also fell from 8% to 6%. Meanwhile, income tax rates remained unchanged.
Key takeaway 4: Inheritance tax (IHT) extended
Inheritance Tax (IHT) is a tax on the value of a person's estate (property, money, and possessions) when they pass away. Here’s what you need to know about today’s announcements:
What changes did Labour announce to IHT in the Autumn 2024 Budget?
Rachel Reeves has confirmed that IHT thresholds will be extended until 2030. She said:
"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 £1million when a tax-free allowance is passed to a surviving spouse or civil partner."
Inherited pensions will also be subject to IHT from April 2027.
What happened to IHT in previous Budgets?
In the Spring 2024 Budget, the Government reiterated its commitment to maintaining the current IHT framework, with no new reforms introduced. The same was the case in the Autumn 2023 Budget.
At a glance: Other takeaways
- Fuel duty and corporation tax frozen
- Non-dom tax status abolished
- 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
Conclusion
This Autumn Budget 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.
As this change comes into effect on October 31, letting agents must ensure they are ready to manage these conversations with new and existing landlords.
