How the Autumn Budget Affects Homeowners, First-Time Buyers, and Landlords

The recent Autumn Budget brought several updates impacting homeowners, first-time buyers, and landlords, primarily around Stamp Duty and Capital Gains Tax (CGT). Here’s a summary of the key points you need to know:

1. Capital Gains Tax on Residential Property Remains Unchanged

Despite predictions, Capital Gains Tax on residential property sales remains at 18% for basic-rate taxpayers and 24% for higher-rate taxpayers. In contrast, CGT on non-residential assets, like shares and commercial properties, saw an increase to 18% and 24% (up from 10% and 20%).

2. Reduction of Stamp Duty Nil-Rate Band

The Stamp Duty thresholds, temporarily raised in 2022, are set to revert on 1 April 2025. From that date, any property purchases over £125,000 will incur Stamp Duty, down from the current £250,000 threshold, leading to higher taxes for many buyers.

3. Changes in Stamp Duty for First-Time Buyers

From 1 April 2025, the Stamp Duty exemption threshold for first-time buyers will decrease from £425,000 to £300,000. The maximum property value eligible for relief will drop from £625,000 to £500,000, likely prompting some first-time buyers to expedite their purchases.

4. Increased Stamp Duty on Additional Properties

Effective from 31 October, the surcharge for purchasing additional properties, such as second homes or rental investments, has increased from 3% to 5% on the entire purchase price, including properties valued up to £250,000.

5. Higher Stamp Duty for Companies Purchasing Properties

For companies and other "non-natural persons" buying residential properties valued over £500,000, the flat Stamp Duty rate increased from 15% to 17%.

6. Inheritance Tax (IHT) Threshold Frozen

The IHT threshold will remain frozen at £325,000 until 2030, adding pressure on estates as property values potentially increase over the coming years.

7. Abolition of Non-Dom Tax Status

From April 2025, non-dom status and its tax benefits will be removed. This change may reduce the UK’s appeal for some high-net-worth international buyers, potentially impacting the luxury property market.

8. Annual Tax on Enveloped Dwellings (ATED) Increases

The annual ATED charge will rise in line with September 2024's CPI figure of 1.7% for the 2025/26 period.

What This Means for Buyers and Sellers

Until 31 March 2025, Stamp Duty rates will stay as follows:

- For purchases above £250,000 (or £425,000 for first-time buyers), the relevant portion of the purchase price will determine the rate.

- If a property’s purchase price exceeds £625,000, first-time buyers must pay the standard £250,000 threshold.

After 1 April 2025, these thresholds will change, including the Stamp Duty threshold for first-time buyers returning to £300,000 and other changes that could impact property transactions.

Final Thoughts

While this budget may seem relatively mild for the property market, with few unexpected announcements, immediate changes to Capital Gains Tax and Stamp Duty on additional properties left limited time for response. Buyers can still benefit from a small tax advantage by completing purchases before the Stamp Duty threshold reverts on 1 April 2025.

As tax implications vary by individual, it’s wise to seek guidance from a tax adviser or estate agent if you’re considering a property transaction soon. For tailored advice or to discuss your property plans, please reach out to Chase Buchanan’s local branch or contact us directly, and we’ll connect you with an expert who can assist.