In October 2024, Chancellor Rachel Reeves presented the Labour Government’s inaugural Autumn Budget for landlords and various other sectors, unveiling several measures that will directly affect landlords and property investors. The most significant is an increase in the Stamp Duty Land Tax (SDLT) surcharge for additional properties, rising from 3% to 5%. While concerns over potential changes to capital gains tax (CGT) and inheritance tax (IHT) did not materialise, the budget still introduces key challenges for landlords.
These adjustments will likely reshape the buy-to-let (BTL) market, particularly for new investors and high-value property acquisitions. However, seasoned landlords with long-term goals are expected to remain active, especially those focusing on rental income and property as a generational asset. As experts in property management, Denhan International is here to support landlords through these changes. Below is a summary of the key points landlords need to know.
Stamp Duty Land Tax (SDLT)
Effective 31 October 2024, the SDLT surcharge for second homes and investment properties will rise from 3% to 5%. This applies to landlords, property investors, and companies purchasing additional residential properties.
For example, a landlord buying a £200,000 property will now face a £10,000 surcharge under the revised rates, an increase of £4,000. These changes are part of the government’s effort to address housing market imbalances and could impact the profitability of buy-to-let investments.
Additionally, the temporary extension of the SDLT nil-rate threshold to £250,000 will end on 31 March 2025, reverting to £125,000 from 1 April 2025. This means properties purchased after this date will incur higher tax costs.
To account for transactions already underway, a transitional rule allows the previous 3% surcharge to apply if contracts were exchanged before 31 October 2024 but completed on or after this date. Non-UK residents will continue to face a 2% surcharge, making their effective SDLT rate 7%.
For landlords navigating these changes, Denhan International can assist in evaluating the financial impact on your property portfolio and help optimise your investment strategy.
Inheritance Tax (IHT)
The IHT nil-rate band will remain frozen at £325,000 until April 2030, providing some stability for landlords. However, from April 2027, inherited pensions will become subject to IHT, significantly altering estate planning considerations.
Landlords may need to explore alternative ways of transferring property wealth, such as setting up Family Investment Companies. From April 2026, changes to agricultural and business property relief will also introduce a tiered structure: the highest 100% relief will apply only to the first £1 million of qualifying assets, with any value above this receiving 50% relief.
Meanwhile, offshore trusts, which have historically been exempt from IHT, will lose this status under new rules. Transitional arrangements will allow some flexibility for landlords affected by this change.
Denhan International offers property management services that can help landlords protect their investments and plan for the future.
Capital Gains Tax (CGT)
CGT rates for individuals will increase from 31 October 2024. Basic-rate taxpayers will see rates rise from 10% to 18%, while higher-rate taxpayers will face an increase from 20% to 24%. These align with the CGT rates already applied to property sales.
Changes to Business Asset Disposal Relief (BADR) will see the rate increase to 14% in April 2025 and to 18% in April 2026. However, as most landlord-held properties are considered investments rather than qualifying business assets, the applicability of this relief will remain limited. For landlords considering selling properties or restructuring portfolios, Denhan International can provide expert advice on how to navigate these tax changes.
Non-Domicile Tax Changes
From April 2025, the non-domicile tax regime will be replaced with a residence-based system. Under the new rules, all foreign income will be fully taxable from the outset, with no initial reduction.
For CGT purposes, remittance basis users will be allowed to rebase personally held foreign assets to their value as of 5 April 2017 when disposing of them, provided certain conditions are met. Denhan International can assist non-dom landlords with adapting to these reforms while maintaining a strong investment strategy.
Other Budget Highlights
- Late Payment Interest: HMRC will increase interest on unpaid tax liabilities by 1.5 percentage points from April 2025.
- National Insurance Contributions (NICs): Employers’ NICs will rise from 13.8% to 15% on weekly earnings above £175, and the threshold for NIC liability will drop to £5,000 annually from April 2025.
- Making Tax Digital (MTD): The government will expand MTD for Income Tax Self-Assessment to include individuals earning over £20,000 by the end of this Parliament.
These measures could increase administrative burdens for landlords and small business owners. Denhan International provides comprehensive property management services to ease the workload and help you focus on growing your portfolio.
Conclusion
The 2024 Autumn Budget brings significant tax changes for landlords and property investors, particularly through higher SDLT rates and updated tax policies. Navigating these reforms will require careful financial planning and a proactive approach to property management.
At Denhan International, we’re dedicated to helping landlords adapt to these changes. From managing your properties effectively to our Guaranteed Rent scheme, our team is here to support you every step of the way.
Contact Denhan International today to learn more about how we can help you thrive in this evolving property landscape.