X
From the Experts on the New Forest
Interested to know your home’s value?
X
From the Experts on the New Forest
Interested to know your home’s value?
The Government’s October 2024 Budget introduced several measures that will affect property owners as well as those considering buying and selling property from now on. These changes span several areas, including Stamp Duty, the taxation of non-domicile landlords, Inheritance Tax, and Capital Gains Tax.
Below is a breakdown of the key tax changes that will have an impact on the sale and purchase of property.
A significant measure announced in the budget is an increase in Stamp Duty Land Tax (SDLT) rates for second homes and additional residential properties. For individuals purchasing a second home or buy-to-let property, the additional surcharge will rise by 2% across all SDLT taxation bands. This means the SDLT liability on a second or additional property purchase will now be higher by £20,000 on the purchase of a £1,000,000 additional property and £40,000 on the purchase of a £2,000,000 additional property.
Those considering selling property at all levels will need to consider the likelihood of their property appealing to a second home buyer and consider the above increase when deciding on a price at which to market their homes.
The budget also introduced changes for non-domicile landlords. Previously, non-doms could benefit from certain tax advantages, including exemption from UK inheritance tax on overseas assets and more flexible rules on income and capital gains tax. However, with the new budget measures, non-domicile landlords will face tighter restrictions on how their UK property holdings are taxed described as a new “Resident-Based Scheme.”
The scope of these changes remain undecided, but it is likely that the 20% tax currently deducted at source on behalf of non-domicile landlords will be altered. This shift will have implications for non-domicile tax liabilities, so staying informed will be crucial as more details are released.
Inheritance Tax (IHT) is also undergoing some important adjustments. Currently, the IHT threshold for individuals is set at £325,000, with an additional main residence allowance that can raise the threshold further.
However, in a shift to move the tax burden to wealthier farm and land owners. Previously, 100% of agricultural property value was exempt from Inheritance Tax. From 6 April 2026, The first £1 million of combined agricultural and business property value will qualify for 100% tax relief. Inheritance Tax will apply to values in excess of £1 million but at the reduced rate of 20% rather than the 40% applied to residential property. This tax can be paid in instalments over 10 years interest free, rather than immediately, as with other types of inheritance tax.
Other spousal exemptions and nil-rate bands that people can access for inheritance tax purpose still apply meaning that, for example, two people with farmland, depending on their circumstances, can pass on up to £3 million without paying any inheritance tax.
Many property owners and investors were concerned that the current rate of Capital Gains Tax (CGT) would increase in the budget. In actual fact, there is no change to the CGT payable on residential properties and this figure remains at 18% for basic rate tax payers and 28% for those at the higher rate. This continuity represents welcome stability for the housing market as any change could well have encouraged a glut of investment property coming to the market pushing down prices in the first quarter of 2025.
