In today’s highly anticipated Autumn Budget, Chancellor Rachel Reeves introduced a range of policies impacting the property industry, marking the Labour Party’s first budget in 14 years.
Stamp Duty Land Tax (SDLT) increase on second homes
Starting Thursday, second-home buyers will see an increased Stamp Duty Land Tax (SDLT) surcharge, rising by two percentage points to 5%. This change aims to support more than 130,000 additional home purchases over the next five years, enabling more first-time buyers and movers to enter the housing market. Closing non-dom tax loopholes The Chancellor confirmed that the Labour government will close exemptions that allow wealthy, often foreign, residents to avoid UK taxes on overseas income. This reform is expected to generate £12.7 billion over five years.
“I’ve always believed that if you make Britain your home, you should pay your taxes here,” Reeves stated in her address. Labour aims to replace the ‘non-dom’ tax rules with a new, residence-based system, further corroborating the government’s stance on taxes.
Commenting on non-dom taxation, Dominic Agace, Chief Executive Officer of Winkworth, with over 100 offices nationwide, including 60 offices across the capital, said, “We are seeing high-net-worth individuals (HWIS) already moving abroad as a tax on money earned elsewhere will be subject to inheritance tax here. This makes the cost of choosing London as a place to live is a step too far. With this exodus, a significant amount of what makes London global centre will disappear and that will be felt across the capital’s economy.”
Capital Gains Tax: Increased rates but unchanged thresholds
The Chancellor announced a rise in capital gains tax (CGT) rates, with the top rate now set at 24%. Effective immediately, the lower CGT rate will increase from 10% to 18%, and the higher rate will rise from 20% to 24%. Notably, property thresholds will remain unchanged. “These changes mean that the UK will still have the lowest CGT rate among European G7 economies,” Reeves emphasized in her address. Currently, higher-rate taxpayers face CGT on gains above £3,000, with rates set at 20% for most assets and 24% for residential property, while basic-rate taxpayers are taxed at 10% and 18%, respectively.
Inheritance Tax Reforms: loopholes closed and new reliefs adjusted
Taking a “balanced approach,” Reeves announced further reforms to inheritance tax (IHT). Here’s a quick summary: Inheritance tax thresholds, previously frozen until 2028, will now remain frozen until 2030. This maintains the £325,000 tax-free threshold, rising to £500,000 if a residence is passed to direct descendants and £1 million when transferred to a spouse or civil partner.
Agricultural and Business Property Relief changes: From April 2026, IHT relief will apply only to the first £1 million of combined business and agricultural assets. Assets over this limit will be taxed at an effective rate of 20%, providing a 50% relief to help protect small family farms. Additionally, a 50% inheritance tax relief on shares listed on the Alternative Investment Market (AIM) will be introduced, ensuring an effective tax rate of 20% on these investments. According to Reeves, these changes are expected to raise over £2 billion by the end of the forecast period.
Dominic Agace commented, “With IHT changes, the dangers lie in the Aim market where IHT benefits have supported this growth marketplace for UK companies as an incubator for small and growing companies looking for capital to grow and generate jobs. Removing this benefit at a time when it has struggled due to a difficult UK economic and political backdrop will severely damage this wealth generator platform from the UK economy. This has significant implications for the UK as a business-friendly marketplace to operate in if it can no longer provide a liquid and functional AIM market.”
£500 million pledged for boosting social housing
In a bid to address England’s housing crisis, the Chancellor committed £500 million to social housing, projected to fund 5,000 new affordable homes. This move aligns with Labour’s commitment to build 1.5 million homes by the end of the current parliamentary term. New restrictions on Right to Buy discounts were also introduced, lowering discounts from 70% to 25% to better protect the availability of social housing.
