Autumn 2024 Budget: Key Changes

Autumn 2024 Budget: Key Changes in Stamp Duty Land Tax and Inheritance Tax

The Labour Government’s recent autumn budget announcement, led by Chancellor Rachel Reeves, has outlined extensive changes affecting various tax areas. From Stamp Duty Land Tax to Inheritance Tax, these changes will impact a wide range of people, including bereaved families, business owners, and agricultural landowners. In this article we will provide a brief summary of the tax changes for those buying/selling property and estate planning.

Stamp Duty Land Tax

For properties in England, the Government has announced a 3% increase in the Stamp Duty Land Tax surcharge for second homes, raising it from 2% to 5%. This change applies to existing homeowners purchasing additional properties valued at £40,000 or more.

Whilst this rise will impact the rental market, for other property buyers, there was no mention of freezing the stamp duty thresholds and they will increase from the end of March 2025.

The Land Transaction Tax thresholds for properties in Wales remains unchanged.

Capital Gains Tax

In a move to increase government revenue, the budget also includes notable changes to Capital Gains Tax rates. This tax applies to the profit made from selling assets such as property or investments.

Currently, basic-rate taxpayers face a 10% tax liability (or 18% on residential property), while higher-rate taxpayers pay 20% (or 24% on residential property). Under the new budget, Capital Gains Tax rates will rise from 10% to 18% for lower earners and from 20% to 24% for higher earners. However, primary residential properties will continue to be exempt due to Private Residence Relief.

Inheritance Tax

Inheritance Tax remains a focal point, although only about 4% of estates currently exceed the tax-free threshold. Presently, each individual has an inheritance tax allowance of £325,000, with amounts over this threshold taxed at 40%. The budget extends these thresholds through to 2030, leaving future rates open to potential revision. A noteworthy addition is that, starting in April 2027, inherited pensions will also be subject to Inheritance Tax.

Business Relief and Agricultural Property Relief on Inheritance Tax

From April 2026, reform measures will change the application of Business Relief and Agricultural Property Relief under Inheritance Tax. While the first £1 million of agricultural and business assets will remain tax-free, any value exceeding this threshold will incur an effective 20% tax rate. This adjustment may significantly impact agricultural landowners and business owners whose estates exceed the exemption cap.

If you would like to discuss any of the above changes with one of our experienced solicitors, then please call us on 01267 237441 or email us at mail@utk.co.uk.