
31/10/2024
THE LABOUR PARTIES FIRST BUDGET:
Here is a Summary of the Budget
Good old Rachel Reeves new UK budget introduces significant changes that impact landlords and property investors. Here are the most relevant aspects for all investors:
1. National Insurance: Employers' contributions are set to rise from 13.8% to 15%, with the threshold dropping from £9,100 to £5,000. This could lead to increased payroll expenses for landlords hiring on-site staff, as well as indirect pressure on costs through supplier wage increases.
2. Stamp Duty Increase: The stamp duty surcharge on second homes rises from 2% to 5%. This impacts investors purchasing additional properties
3. Capital Gains Tax: The increase in Capital Gains Tax (CGT) on shares from 20% to 24% for higher rate taxpayers signals that property CGT rates could stay under scrutiny. While CGT rates for property remain at 18% and 24%, this focus may influence future property tax policies
4. Non-Dom Abolition: The phasing out of the non dom tax regime from April 2025 could impact investors who use non dom status for tax efficiencies. While not directly affecting resident UK landlords, this change may shift some investment back into UK tax residency, possibly stabilising rental demand as other investment assets are repriced.
5. Inflation linked Income Tax: While income tax thresholds will only rise with inflation post 2028/29, this maintains pressure on net income until then. For landlords, rising operating costs, especially with energy and service inflation, will remain a challenge without adjustments to offset these thresholds.
The budget brings in rising upfront costs (stamp duty) and ongoing expenses (National Insurance), and it creates new complexities with CGT and non dom taxation, pressing property investors to re-evaluate profitability strategies in their portfolios.
These changes suggest a shift towards placing more financial responsibility on property and other asset owners.