The 2024 Autumn Budget

The 2024 Autumn Budget was announced on 30 October 2024, the first for the New Labour Government. 

Below is a summary of the Key Points raised by the Chancellor that could impact Real Estate:

1. From 31 October 2024, the Stamp Duty Land Surcharge for second-homes increases from 2% to 5%.
   
   
2. SDLT will increase from 15% to 17% for corporate entities purchasing a residential property worth more than £500,000 where relief from the flat rate cannot be claimed on the purchase.
   
   
3. Employers National Insurance contributions on employee remuneration will be paid above £5000 at the rate of 15% from April 2025.
   
   
4. Abolition of the Non-Dom Tax Regime - the temporary repatriation facility has been extended from 2 to 3 years. The Temporary Repatriation Facility will be available for a limited period of 3 tax years, from 2025 to 2026. The Temporary Repatriation Facility rate will be 12% for the first 2 years and 15% in the final tax year of operation.
   
   
5. Capital Gains Tax (CGT) – for disposals of assets, the lower rate (for basic rate income taxpayers) will increase from 10% to 18% and the higher rate (for additional/higher rate income taxpayers) will go from 18% to 24% effective from 30 October 2024. The CGT rate where Business Asset Disposal Relief (BADR) is claimed will rise gradually (from the current 10%) to 14% from 6 April 2025 and 18% from 6 April 2026. The separate CGT rates for disposals of residential property have now effectively been abolished.
   
   
6. Inheritance Tax (IHT) – the freeze on IHT will continue until 2030. Pension pots to be included in estates for IHT purposes from April 2027.
   
   
7. Carried Interest – increase in carried interest CGT rate of 32% (from 28%) from April 2025 and further changes from April 2026 to bring carried interest within income tax framework.
   
   
8. Business Rates set to change for Retail, Hospitality and Leisure Properties from 2026-27 and the government’s published proposals can be found here.
   
   
9. The Chancellor announced an increase in the Affordable Homes Programme to £3.1bn.
   
   
10. More Planning Officers were also announced by the Chancellor to increase the efficiency of the planning process. The Government has also recently published guidance on its intended reforms to the National Planning Policy Framework.
    
    
11. More than £20bn New Funding For R&D was also announced by the Chancellor who wants to “capitalise” the National Wealth Fund.

The measures announced present both challenges and opportunities to the Real Estate Sector. 

Financial challenges for SMEs are as tough as they have ever been, especially with the increased cost of borrowing throughout the last couple of years and the ecommerce revolution of the UK High Street. Thus, the extent to which any proposed change to business rates for SMEs is going to unlock growth in this field without mass sector diversification is debatable. Certainly, the trend in Real Estate Finance has geared towards corporate recovery rather than abstract business growth in recent times.

Nevertheless, extra R&D Funding most certainly will look to boost innovative industry, including building more gigafactories to cement the UK’s Leading AI Reputation. This represents a huge opportunity for Real Estate. 

In addition, the Budget demonstrates the government’s commitment to boosting the housing market, especially in further funding for Affordable Homes and the anticipated planning reforms looking to simplify red tape. Moreover, the Stamp Duty Land Tax Surcharge changes also serve as an example of a trend gearing closer to property acquisition than property rentals (through buy-to-lets) in the years to come.

Ultimately, the real impact of the Budget on the Real Estate Sector still remains to be seen, but as always, the sector will diversify and bring new opportunities. Please get in touch via our website if you would like to discuss a matter with a member of our team.