October 30, 2024

Autumn Budget Review – Tax Relief for Landlords?

Autumn weather provides a raft of potential analogies for the measures announced and their impact on individuals, families and businesses.

But in what is billed as the biggest budget since George Osborne’s austerity budget of 2010, and what is sure to mark a political shift in direction with a change in governing party for the first time in the same timeframe.

We can be certain that property investors, property developers, and SME trading businesses will all be affected to varying degrees – and as these make up the end clients of our network members’ commercial finance brokerages, we wanted to review some of the key budget measures that could be relevant to them.

Budget changes to tax measures

Experts are already pointing to the varying degrees that the different groups we serve will be bearing the weight of the increased tax measures announced:

*Capital Gains Tax (CGT) – The lower rate of CGT on asset disposal lifted from 10% to 18%, and the higher rate from 20% to 24%

CGT on the sale of residential property will also increase from 18% to 24%

*Early commentator feedback is that this lower-than-expected CGT rate could prevent the exodus of landlords from assets that they may now stay invested in?

Inheritance Tax (IHT) – Affecting 6% of estates, a freeze on bands extended from 2028 to 2030 – Pensions passed down to beneficiaries will now be included in estates for IHT purposes

Business and Agriculture assets will remain excluded from IHT under £1m – assets £1m+ will be subject to a 50% relief and 20% tax band applied

*Stamp Duty – For the purchase of second homes, lifted to 5% from 3% from tomorrow, 31st October

*Pipeline mortgages potentially now to be re-negotiated as buyers look to pass this additional cost on to the sellers?

The Affordable Homes Programme (AHP) gets a £500m boost – the Treasury says that this will deliver up to 5,000 new affordable social homes

Employers’ National Insurance – Increased by 1.2% from April 2025 to 15% – combined with the threshold being reduced for payments to £5,000 from £9,100 – the Chancellor forecasting this measure will raise an additional £25b per annum

Businesses will receive 40% relief on business rates for retail and hospitality up to a cap of £25,000

‘Corporate Tax Road Map’ – Aimed at providing some certainty for SMEs – Commitment to cap corporation tax at 25% and Full expending – £1m investment grant

Income Tax – Threshold freezes for income tax bands will not see an extension from 2028

VAT – no change

Increasing the employment allowance for small businesses from £5,000 to £10,500 means that small businesses could employ four people on a living wage with no employer NI contributions

National Living Wage up 6.7% – and up 16.3% for young people 18-20

Fuel Duty – Freeze remains, 5p cut remains for 2025/26

Does the budget match the forecast?

After weeks and months of speculation, we now know that this is the biggest tax-raising budget since 1993, and experts will pore over its economic and political ramifications.

As commercial finance brokers, we now know that the lower-than-forecast CGT bands announced may prevent a stampede of landlords selling before 31st March – but time will tell if it proves to be a deterrent to property as an investment asset.

Potential impacts from the budget

We suspect small businesses and SMEs will feature heavily in the headlines as the weight of employer National Insurance and increased National Living Wage will have to be calculated.

We started October by recommending that brokers approach the budget with empathy for the possible impacts (or not) that it may have on their clients—this suggestion stands.

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About Fiducia Commercial Network

Fiducia Commercial Network is a commercial finance ‘Appointed Representative’ network created to allow independent firms to provide commercial property finance and trading business finance options to their existing client base and network.

Joining the network provides opportunities for professional brokers to offer a full range of commercial finance solutions by acting as an Appointed Representative (AR) with the full support of the Fiducia Commercial Network team.

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