Autumn Budget 2024 Unpacked: What’s Next?

The Autumn Budget 2024 introduced tough financial measures to address a growing budget deficit. The government aims to raise over ￡40 billion in public finances through various measures like tax hikes, spending cuts, threshold freezes, and more. This decision will significantly affect property owners, investors, and businesses. Here is a summary of the main tax decisions in the budget and how they might impact the property market.

1. Tax Hikes to Address the Deficit

To tackle the ￡22 billion gap in public finances, the Chancellor aims to raise a total of ￡40 billion through various decisions. This large collection of government revenue will help the government run smoothly and provide relief and exemptions in necessary areas.

To address this collection of government revenue, Chancellor Rachel raised the Capital Gains Tax (CGT) rates for other assets from 10% to 18% for the basic rate and the higher rate from 20% to 24%. In addition, the Employer’s National Insurance Contribution (NIC) rate increased to 15%, which will come into effect from April 2025. The Inheritance Tax (IHT) threshold freeze has been extended for an additional two years until 2030.

Although these changes are aimed at the country's economic development, they leave taxpayers with less money in their pockets and more for taxes.

2. Implications for Large Businesses

In her budget speech, Reeves explained that the government will focus on helping small and medium-sized businesses grow. The government's objective is the country's economic productivity. While small businesses can benefit from some allowances, large businesses may take the front lines of pressure for several reasons. Here are some of them:

• Increased minimum wage to ￡12.21 per hour for people over 21
• Increased Employer’s NIC rates to 15%
• Employment allowance has also increased from ￡5,000 to ￡10,500

These reasons may lead to businesses reconsidering investment strategies and hiring plans.

3. Property Sector-Specific Impacts

CGT rate rise was the most talked about and anticipated topic pre-budget. However, it came as a positive surprise for property investors, as Reeves decided not to increase the residential CGT rates. So, CGT rates currently remain at 18% for the basic rate taxpayers and 24% for the higher rate taxpayers.

Another anticipation of a tax rate hike was the Stamp Duty Land Tax (SDLT). Although SDLT rates remain unchanged, the government decided to increase the Stamp Duty surcharge on second homes from 3% to 5%.

Property experts and investors say that any amount of rate changes or reliefs may not change the property sector as it may be too far gone. Many more investors are opting out of the property market and selling their Buy-to-Let properties. However, rental income and property investment remain one of the most popular strategies for passive income in the UK.

Conclusion

The Autumn Budget 2024 introduces significant changes to reduce the UK’s budget deficit and improve the economy. The measures include tax increases and higher allowances to help stabilise public finances. However, these changes may challenge taxpayers, especially large businesses, and property investors. The changes might make them rethink their hiring and investment plans.

The property sector will face mixed effects, with new reliefs and extra costs, like the higher Stamp Duty surcharge on second homes. As these new measures take effect, businesses and investors must plan strategically and adapt to the changing economic environment.

For expert insights, visit UK Property Accountants or read our detailed article on Autumn Budget Changes.