UK Government Autumn Budget
The UK's Chancellor, Rachel Reeves, announced the 2024 budget last week, which includes a significant tax increase of £40 billion. This is the largest tax increase in a budget since 1993. Here we aim to unpack some of the changes that may apply directly to mortgage and property markets
Overview
The budget aims to balance the need to reduce the national debt with the need to invest in public services and stimulate economic growth. It remains to be seen how these measures will impact the UK economy and it's citizens
Increases will be achieved through various measures, including raising National Insurance contributions for employers, abolishing certain tax loopholes, and raising the national minimum wage. The budget also includes a significant investment in public services, with an additional £22 billion allocated to the NHS. This is intended to help reduce waiting lists and improve patient care
Housing and Property
- Stamp Duty Hike: The Chancellor has raised the stamp duty land surcharge for second home purchases from 2% to 5%, effective 31st October 2024. This will likely impact investors purchasing additional properties
- £5bn Housing Investment: The government plans to invest over £5bn to boost housing supply. This includes increasing the Affordable Homes Programme to £3.1bn and providing £3bn in support and guarantees for small builders. Renovations across the country will also deliver thousands of new homes
- Right to Buy Curtailed: The government will lower discounts for buying council houses. Proceeds from such sales will be retained by local authorities to fund housing improvements and new builds
- Cladding Removal Accelerated: A £1 billion fund will speed up the removal of unsafe cladding on residential buildings, a key recommendation from the Grenfell Tower Inquiry
Capital Gains Tax
The tax on profits from selling assets i.e. investments (including stocks) will increase. Starting in April 2025, the lower rate will rise from 10% to 18%, and the higher rate will increase from 20% to 24%
Please note that these changes only apply to non-residential assets. The tax rates on residential property will remain the same
Income Tax and National Insurance
Starting in 2028-29, the income levels at which you start paying income tax and National Insurance will increase based on inflation. The government will not extend the previous freeze on these thresholds
Employer National Insurance
From April 2025, businesses will pay a higher rate of National Insurance on employee earnings. The rate will increase from 13.8% to 15%
Additionally, businesses will start paying National Insurance on employee earnings above £5,000 instead of the current £9,100
Wages
National Minimum Wage Increase: The National Living Wage for people aged 21 or older will rise by 6.7% from £11.44 an hour to £12.21 from April 2025. The National Minimum Wage will also rise for younger workers and apprentices
You can find more information about the budget on the UK government website: www.gov.uk/government/chancellor-budget
MCA Finance Limited is not able to provide advice on taxation matters, and the above content should not be deemed as tax advice. We recommend you seek professional advice from a suitably qualified adviser