Autumn Budget 2024

On 30th October 2024, Chancellor Rachel Reeves delivered the new Budget Bill to the House of Commons, setting the stage for future financial and economic policies. Specifically in the housing sector, the government will allocate £5 billion for 2025/2026, prioritising investments to increase the availability of more affordable housing. Below is a closer look at some of the most relevant key policy changes, many of which have sparked intense debate among political parties.

SDLT – Overview and New Measures

Stamp Duty Land Tax (SDLT) is a tax on property transactions. Its rate is calculated as a percentage of the transaction value, varying by property type and buyer profile (e.g., first-time buyers or investors).

The most notable change, effective on 31st October 2024, raises SDLT from 3% to 5% for purchases of second homes, buy-to-let, acquisitions by companies. Also, for residential property purchases by certain corporate entities valued over £500,000, the SDLT rate rises from 15% to 17%.

Starting from 1st April 2025, for individuals purchasing residential property as their main residence, the SDLT threshold will decrease from £250,000 to £125,000 and for first-time buyers will decrease from the previous £425,000 to £300,000.

Corporation and Business Tax

The main Corporation Tax Rate remains at 25% for profits exceeding £250,000. The smaller businesses with profits up to £50,000 will continue to benefit from a 19% rate and there will be a gradual increase for profits between £50,000 and £250,000. Regarding the tax on Carried Interest, relevant for investment and private equity firms, the rate will increase from 28% to 32% starting on April 2025.

Undoubtably, the 2024 UK Budget seems necessary in order to address the various economic pressures that the UK has been facing, including inflation, slow growth, and high public debt. In that regard, the most substantial revenue-generating measure will be the increase in Employer National Insurance Contributions (NICs) from 13.8% to 15% in April 2025, coupled with a reduced contribution threshold. This adjustment alone is expected to generate £25 billion annually.

Inheritance Tax

The exemption threshold for inheritance tax has been frozen until 2030, maintaining the current threshold of £325,000 with an additional £175,000 allowance for main residences. Starting on April 2027, inherited pensions will be also included in inheritance tax calculations and from 2026, the above taxation on agricultural and business assets will be also revised.

Non-Dom Taxation

As expected, the 2024 Budget also introduces critical reforms for “non-domiciled” (non-dom) taxpayers. The remittance basis regime—which allowed non-doms to avoid UK tax on foreign income and gains unless remitted to the UK—will be phased out from April 6, 2025, and replaced with a residency-based tax system. Under this new system, non-doms who have not been UK residents for the past ten years will enjoy exemptions on foreign income and gains for their first four years in the UK, regardless of domicile status. Existing non-doms using the remittance basis will have access to transitional options to mitigate the impact, and tax exemptions for income and gains within non-dom trusts will be removed unless they meet the new requirements.

Capital Gains Tax

Capital gains tax will be increased. The lower rate will be raised from 10% to 18% whilst the higher rate from 20% to 24%. There will be, however, no increase on capital gains rates applied on residential properties.

Thinking Aloud

The 2024 fiscal reforms aim to strengthen public finances while making the property market more accessible for residents by curtailing speculative investments. While these restrictive policies present challenges for many investors and professionals, they also offer an opportunity to re-evaluate long-term strategies in light of substantial global changes.

The UK, with London at its core, remains an international attraction not only as a global financial hub but also for its transparent property market, top-tier education, and respected legal system. And, of course, London’s unique appeal as a vibrant city that attracts talent and energy from around the world, within a democratic, meritocratic, and cosmopolitan environment, remains undeniable.