As the Chancellor, Rachel Reeves, prepares to deliver the highly anticipated Autumn Budget on 30th October 2024, there is growing speculation about tax changes that could have significant implications for property owners, landlords, and investors.
At Lansdown Insurance Brokers, we understand the importance of staying informed on potential reforms that could affect your financial planning and asset management. In this blog, the Landlord Insurance team explore some of the key predictions and what they might mean for you.
Fuel Duty Considerations
With rising energy costs and environmental concerns, the government may seek to raise Fuel Duty to both encourage greener alternatives and generate revenue.
What this means for landlords and lettings agents: Higher fuel costs could indirectly affect property maintenance, transportation, and utility expenses. Letting agents and property management firms may need to account for these rising operational costs in their financial planning.
Potential Capital Gains Tax (CGT) Increases
One of the most talked-about changes is a potential increase in Capital Gains Tax (CGT), especially on residential property sales. The current CGT rates are:
- 18% for basic rate taxpayers
- 24% for higher and additional rate taxpayers
However, to help tackle the national deficit, the Chancellor may raise CGT across the board. Predictions suggest rates could rise to 30% for all property sales or be aligned with income tax rates, meaning:
- Basic rate taxpayers could see CGT rise from 18% to 20%
- Higher rate taxpayers might face an increase from 24% to 40%
- Additional rate taxpayers could see CGT jump to 45%
What this means for property owners: If these changes are implemented, property owners planning to sell should factor in the higher tax burden. Strategic timing or restructuring of sales may help mitigate the impact.
Inheritance Tax (IHT) Reforms
Inheritance Tax (IHT) is currently charged at 40% on estates valued over £325,000, but upcoming changes could significantly alter this. Property owners and investors are increasingly concerned about the possibility of:
- A decrease of the £325,000 threshold, which would increase the number of estates subject to IHT.
- A rise in the IHT rate above the current 40%, placing a heavier burden on larger estates.
- The introduction of Capital Gains Tax (CGT) on inherited properties, creating a dual taxation scenario for heirs and beneficiaries.
What this means for investors: If you’re planning to pass property to future generations, now is the time to reassess your estate planning strategies. Seeking professional advice may help mitigate the impact of these potential IHT reforms.
Possible changes to Stamp Duty
Another property tax that could see changes in the Autumn Budget is Stamp Duty. At present, landlords and property investors face a 3% surcharge when purchasing additional properties. While there have been few indications from the government about potential reforms, various housing industry groups have been advocating for adjustments to the current system.
Darren Bee, Associate Director at Lansdown, comments:
“As we approach the Autumn Budget, there’s a lot of speculation around potential changes to Inheritance Tax and Capital Gains Tax that could affect landlords and property owners. While it’s important to stay informed, we always recommend that clients speak to their financial or tax advisors for guidance on how any changes may impact their specific circumstances. At Lansdown, we’re here to ensure that our clients have the right insurance protection in place, whatever the outcome of the Budget.”
Final Thoughts: Prepare for Changes Ahead
While we await the official announcements from Chancellor Reeves, it is clear that the 2024 Autumn Budget could bring significant changes, particularly for landlords and property owners. The expected increases in CGT and potential adjustments to IHT should be of particular concern to those in the property sector.
This article is for informational purposes only and should not be considered legal advice.
About Lansdown Insurance Brokers
Lansdown Insurance Brokers are specialists in Landlord Insurance and Block of Flats Insurance. We can provide flexible policies to suit individual client needs. Whether you’re a landlord, letting agent, or property owner call the team on 01242 524498 or email enquiries@lansdowninsurance.com.
Lansdown is part of the Benefact Group, a charity-owned, international family of financial services companies that gives all available profits to charity and good causes.