The Autumn Budget 2024 introduces pivotal tax changes aimed at reshaping property investments, capital gains, and corporate growth dynamics. With significant adjustments to Stamp Duty Land Tax (SDLT), Capital Gains Tax (CGT), and business reliefs, this year’s budget targets both residential and commercial sectors, emphasising financial responsibility and housing accessibility. This article will explore these measures, with a particular focus on their implications for commercial property transactions and corporate clients. Understanding these changes is essential for businesses and investors seeking to navigate the evolving tax landscape effectively.
Stamp Duty
The Budget brings notable changes to Stamp Duty Land Tax (SDLT), affecting both residential and commercial property transactions across England and Wales. One major adjustment is an increase in the Higher Rate for Additional Dwellings from 3% to 5%, targeting second homes, buy-to-let properties, and corporate entities purchasing residential property. Corporate buyers of high-value residential properties, those valued over £500,000, will now face a flat SDLT rate of 17%, up from 15%. These changes reflect the government’s focus on prioritising housing for owner-occupiers.
The Labour Manifesto proposed raising the SDLT surcharge for non-residents purchasing residential property in the UK from 2% to 3%. However, this proposed increase wasn’t addressed in this year’s Autumn Budget, and we are still awaiting further updates or confirmation on its potential implementation.
For the commercial property sector, these SDLT updates mean that companies may have to rethink their acquisition strategies to manage increased tax costs. The SDLT adjustments represent a shift towards regulating investment-driven property inflation, potentially reshaping corporate property portfolios by encouraging more strategic planning around acquisitions and asset management to offset tax impacts.
Capital Gains Tax
The Budget also introduces adjustments to Capital Gains Tax (CGT), impacting individuals and businesses involved in property and asset sales. The CGT lower rate for assets other than residential property and carried interest has increased from 10% to 18%, while the higher rate has gone up from 18% to 24%, effective from 30 October 2024. These adjustments will primarily impact high-net-worth individuals and investors, as they become more liable to pay tax on annual investment gains exceeding their allowance. This shift could necessitate strategic tax planning for those looking to optimise their gains under the new rates.
These changes have wide implications for property investors, companies, and legal advisers, as tax efficiency in asset management becomes more challenging. Investors may need to explore alternative investment structures or timing strategies to mitigate CGT impacts, while companies might reconsider asset portfolios and disposition strategies. For professionals in the commercial property and corporate legal sectors, staying current with these updates is essential for guiding clients through the evolving tax landscape.
Housing
The Budget has committed £5 billion towards building 1.5 million new homes over the next five years, alongside initiatives like the New Homes Accelerator and New Towns Taskforce to expedite large-scale developments across England. A consultation on the National Planning Framework is also underway, and the concept of brownfield passports is being explored to enable faster approvals for suitable projects. An additional £500 million for the Affordable Homes Programme aims to support the construction of 5,000 new affordable homes, bolstering housing market stability.
To further support housing, Council’s in England can now retain 100% of receipts from sales to reinvest in new properties, intended to protect and expand council housing stock. Reforms to the Right to Buy scheme include reduced discounts, while a £3 billion housing guarantee scheme aims to stimulate the private housing market, supporting SMEs and the build-to-rent sector. Social housing providers will also receive a rent settlement of Consumer Price Index plus 1% for five years.
Although these measures show a commitment to increasing housing supply, some have argued for stronger action. The anticipated reversal of the multiple-dwellings relief abolition, announced in Spring, was absent from this Budget.
How we can Help
The full impact of the Budget on the Real Estate Sector is yet to be determined, but as always, the sector will adapt and create new opportunities. If you’d like to discuss anything about the budget or your commercial needs, please do not hesitate to get in touch on 01244 312306 or Contact Us. Our team is ready to help you navigate the new landscape and maximise your property’s potential.
