Budget summary and implications for property owners

Following the UK Budget 2024 announcements last month, here is a summary of key tax updates for property-related changes.

Stamp Duty

• The surcharge on buy-to-let and second homes has increased from 3% to 5%, effective immediately.

• First-time buyer relief will reduce from £425,000 to £300,000 by April 2025, with the zero-rate threshold for all buyers returning to £125,000.

IHT (general)

• The Nil Rate Band for IHT has been frozen at £325,000 until April 2030. This figure has been set since 6 April 2009 and was previously said to remain fixed until April 2028.
• The Residence Nil Rate Band will also remain unchanged for the same period at £175,000.

Agricultural Property Relief (APR) and Business Property Relief (BPR):

• From April 2026, APR will fully cover only the first £1 million of agricultural assets. Assets above this, will be liable for Inheritance Tax, at an effective rate of 20%. (The Nil Rate Band and Residents Nil Rate Band remain available and it will be even more important to utilise these alongside this).
• APR will be extended to include land managed under environmental agreements from 6 April 2025. 

Delinked payments

• From 2025, it has been confirmed that delinked payments will be limited to claims up to £30,000 per annum. The percentage reduction has been agreed at 76%, meaning no individual business will receive over £7200 next year (24% of the reference amount). Payment rates beyond this have not been confirmed.

Capital Gains Tax (CGT):

Rates: The basic rate for CGT is now 18%, up from 10%, while the higher rate is now 24%, up from 20%, effective from 30 October 2024. We were pleased to hear of the chancellor’s decision to leave CGT on residential property and buy-to-let properties unchanged. 

Non-Listed Investments: AIM shares and similar investments now qualify for only 50% relief, and they are taxed at 20%.

National Insurance:

• Employer contributions have risen from 13.8% to 15%.
• The earnings threshold for employers to start paying National Insurance has lowered from £9,100 to £5,000.

Furnished Holiday Lets

• As indicated in the Spring Budget, it has been confirmed that Furnished Holiday Lets will receive the same tax treatment as standard let residential properties. This will come into effect on or after 6 April 2025 where Income Tax and for Capital Gains Tax is concerned; and from 1 April 2025 for Corporation Tax and for Corporation Tax on chargeable gains.

If you are considering the sale of a property, if you are a farm business looking to make succession plans or to secure the future of the farm for the next generation; or if you are a landlord exploring options on your property investment portfolio following the budget, get in touch today to arrange a meeting with a member of our team to see how we can help you to get the most from your property investments. Our key areas of expertise include:

-              Estate agency (property sales and property lettings)

-              Chartered surveying and red book valuations

-              Agricultural and rural services

-              Property management

-              Nitrate mitigation and BNG

Please note: We are an estate agency and surveying firm and are not qualified to provide tax advice. We recommend consulting a qualified tax professional for specific guidance.