Yesterday, Labour undertook its first budget in 14 years with a focus on ‘rebuilding Britain’.
This however, comes with a £40bn tax bill.
So what did Rachel Reeves announce for the property market, and how will it impact you?
Firstly, let’s take a quick look at what didn’t change.
Despite many second home owners bracing themselves for an increase in Capital Gains Tax, the government decided to keep rates at their current levels. This was good news for many landlords who could’ve been high with a significant increase!
So what did change?
Firstly, let’s look at stamp duty.
Prior to yesterday’s announcement, additional homeowners were subject to an additional 3% stamp duty charge when buying more properties. This has now been increased to 5% with immediate effect.
For a property worth £1,000,000, you would currently pay £71,250 in stamp duty (as of September 2022).Now, however, you will pay £91,250. This move has come into force straight away and you will pay the higher rate if the Effective date of transaction was on the 30th of October 2024 or after.
There are slightly different rules if you’re not a British citizen and you are likely to be required to pay an overall higher rate of stamp duty.
The situation is different again if a residential property costing more than £500,000 is bought by certain corporate bodies or ‘non-natural persons’, another area where the rate has seen an immediate increase.
If you’re not planning on buying an additional property, stamp duty rates are remaining the same up until April 2025, providing property hunters some breathing space to exchange on a property before they see an increase.
It’s important to note that the actual rate of stamp duty is not changing, but the thresholds are. This will impact first-time buyers who purchase a property between £300,000 and £500,000, and everyone else buying a property over £125,000.
This is mainly to do with the fact that the thresholds have been lowered so more people pay stamp duty overall.
Even if your property is worth way more than £250,000 ( the old threshold ) you will pay more stamp duty as you will now be liable to pay for the value between £125,000 and £250,000.
Please note, tax law can be complicated and you may be eligible for exemptions and reliefs so it’s always absolutely critical to speak to an expert who can provide you with personalised advice!
A lot of the more ‘minor details’ regarding the budget have also yet to be confirmed, so there may be some more things that will impact your personal situation.
If you’re interested to find out more, please get in touch!
