Chancellor Jeremy Hunt’s Autumn Statement offered cold comfort to the property sector.

And some commentators believe his tax changes might well be particularly damaging to landlords.

Just weeks after Kwasi Kwarteng’s now notorious mini-Budget sent the markets into a panic, Hunt set out detailed tax and spending plans specifically designed to offer stability and predictability where there had been uncertainty.

He offered measures to deal with cost-of-living and economic crises which he blamed full square on ‘unprecedented global headwinds (by which he meant largely the war in Ukraine and the Covid pandemic.)

Let’s take a closer look.

Reduction of capital gains

In order to help restore the public finances and make the tax system fairer, Hunt he would halve the tax-free allowance for capital gains in 2023-24 from £12,300 to £6,000 and then again to £3,000 in 2024-25.

Landlords who are looking to sell will be some of the hardest hit by this as capital gains tax (CGT) is charged at a much higher rate for residential property sales.

According to Tim Walford Fitzgerald, a tax partner at HM Fisher, we can ‘expect to see a decline in the number of disposals – people will hold off from selling their assets during unfavourable conditions’.

He added: “Or, if there is a delayed introduction for the new threshold, look out for a quick spike in sales as individuals and families try to beat the new implementation date.”

Ben Beadle, chief executive of the National Residential Landlords Association (NRLA), said ‘these swingeing cuts to Capital Gains Tax allowances will dissuade investment for years to come’.  

Time-limited stamp duty cut

In a surprise move which hadn’t been speculated on beforehand, the Chancellor announced plans to eventually reverse the stamp duty cuts revealed in Kwarteng’s mini-Budget, stating that he will ‘sunset the measure’ from March 31 2025.

Back in September, the former Chancellor increased the nil rate threshold for stamp duty from £125,000 to £250,000. Meanwhile, the rate at which first-time buyers pay stamp duty on their purchases was upped to £425,000 from £300,000 on purchases worth up to £625,000.

The Treasury tweeted shortly after Hunt’s announcement that the cuts announced in the Growth Plan will now be time-limited ‘to help the jobs & firms that rely on the housing market through the current challenges, while strengthening the public finances in the longer term’.

Beadle would have liked to have seen the government go further by scrapping the 3% additional surcharge on second and buy-to-let homes, which first came into play in April 2016, to boost housing supply.

More tax for higher earners

Hunt announced that higher earners will start paying the top rate of tax (45%) when they earn £125,140. This is down from the present rate of £150,000. As a direct consequence of this, more landlords could be pulled into the top paying tax bracket. This, in turn, has implications for the profits they can make on their rental homes.

The measure was a complete change from what Truss wanted to introduce, scrapping the top rate of tax completely to encourage investment into Britain.

In other tax news, Hunt said that Inheritance Tax thresholds will be frozen for the next two years – leaving hundreds of thousands of home owners liable to paying this tax.

Other announcements

In a comprehensive speech that lasted for nearly an hour, Hunt re-iterated the government’s commitment to its flagship levelling up programme. There was confirmation of plans for Round 2 of the £1.7 billion levelling up programme in addition to more funding for the devolved administrations.

The Chancellor also revealed that the energy price guarantee will be extended, with unit prices capped to ensure average bills don’t surpass £3,000, while plans for the National Living Wage to rise next year were also included.

If you’re looking to come to terms with how the Autumn Statement could affect you, we are here to help.

Here at Key Property Consultants, we can also assist you with any aspect of letting property in London and Kent. To find out more, please contact us today on 0203 793 2033.

Get in touch to find out more about our services to landlords including Guaranteed Rent, short term lets, property management and much more.

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