Property owners breathed a sigh of relief across the nation as rates on profits from selling additional property remain unchanged. 

Capital gains tax on shares, however, did see rates increase from 10% to 18%, and 20% to 24% respectively, which will impact sales of a property-holding vehicle.

Labour increased the surcharge on SDLT in an attempt to make residential property investment less appealing, which it hopes will result in more properties becoming available to purchasers to buy as their primary residence, and in particular to first-time buyers. 

The tax changes to the residential property market are expected to bring in £115m of additional revenue, helping fund Labour’s target of delivery 1.5m new homes.

The main changes:

• no changes for non-residential properties
• the stamp duty surcharge payable on second residential properties increases to 5% (previously 3%), effective 31 October 2024. This is also payable by non-UK residents, and similar changes are made for companies and other non-natural persons
• in addition, the single rate of stamp duty payable by corporate buyers also increases for purchasing residential properties for more than £500,000, from 15% to 17%, effective 31 October 2024
• the reversal of the “mini-budget” halving of the stamp duty threshold from £250,000, back down to the £125,000 from 1 April 2025. 

Labour’s manifesto pledge to “fundamentally reform the business rates system” has seemingly been kicked down the line, with an overhaul not expected until 2026/2027.

Until then, it looks like more pain is in store for the high street. Although the Budget appeared to deliver some good news, with 40% business rates liability relief for retail, hospitality and leisure properties in England, this is in fact down from the current 75%. The standard business rates multiplier will be increased to 55.5p, in line with CPI inflation.

The government also had an unwelcome delivery for the warehousing and logistics sector with an increase in business rates, the impact of which will be further compounded by the increase on the Vehicle Excise Duty and the HGV Road User Levy.

Social housing

• social housing providers are to be allowed to increase rents above inflation
• discounts for social housing tenants seeking to purchase the property they let under the Right to Buy scheme are to be reduced

Furnished holiday lets (FHL)

Legislation is to be introduced to address the specific tax treatment of FHLs. This will remove the current tax advantages for short-term holiday lets, and is expected to result in FHLs being treated as any other property business.