After months of speculation and numerous rumours circulating online, we now have the Chancellor’s full budget plans, with confirmed focus given on raising huge investment towards public services, future energy and transportation – funded through more than £32 billion borrowing over the next five years and the remainder generated from additional tax.
Whilst the investment plan will be focused more towards public services, we have taken a look at the key points that will have an impact on UK sourcing agents and property and land investors.
Key Budget Takeaways
Stamp Duty Land Tax Increase (SDLT)
Most notable for having the quickest impact as the increase has been applied immediately – meaning any investor buying additional properties will increase from 2% to 5%.
The impact of this increase could be hardest on the ‘High Prime’ value property areas and may make investors look at different property investment strategies other than BTL or move to cheaper property areas instead, and of course, offers made on properties today will look very different to those that would have been submitted a month ago.
The fact that this increase is immediate with no warning may well cause the collapse of some purchases in the pipeline, or last minute re-negotiations on the purchase price.
If you link this increase in stamp duty cost along with the increase in Capital Gains Tax upon a sale from April 2025, this may stall the market for investors buying to refurb and then sell on.
Capital Gains Tax (CGT)
The Lower Rate of Capital Gains Tax will rise from 10% to 18% and the Higher Rate from 20% to 24% and residential property will remain at 18% and 24% both applied from April 2025.
As stated above, this increase linked to the increase in stamp duty may stall the ‘Flip’ property investment market and of course we could see an influx of part or whole property portfolios coming to the market to try to beat that April 2025 deadline.
Lifetime Limit – Business Asset Disposal Relief
The Treasury will be maintaining the lifetime limit at £1m to encourage investment in businesses. This will remain at 10% this year, before rising to 14% in April 2025 and 18% from 2026-27.
National Insurance
This will increase for employers by 1.2 per cent to 15%. The secondary Threshold, the level at which employers start paying national insurance on each employee’s salary will be reduced from £9,100 per year to £5,000
The Chancellor has however, increased the Employment Allowance from £5,000 to £10,500, which will mean that 865,000 employers won’t pay any National Insurance at all next year.
Minimum Wage
The legal minimum wage will increase from £10.42 to £11.44 an hour from April. In addition, a new rate will apply to 21 and 22-year-old workers for the first time, instead just those 23 and over.
Business Rates
The Treasury intends from 2026-27, to introduce two permanently lower tax rates for retail, hospitality and leisure properties, paid for by a higher multiplier for the most valuable properties.
Corporation Tax
This will remain capped at 25%
Non-Dom Tax
This will be abolished, with a new residence based scheme introduced with “internationally competitive arrangements” for anyone coming to the UK on a temporary basis. The package changes will aim to raise £12.7 billion over 5 years.
Tax Evasion & Fraud
Expect a closer eye over the coming years on compliance, as the government aims to crack down on those attempting serious fraud, with the goal of saving £4.3 billion a year.
Not to mention the plan to tackle tax evasion with new jobs already announced at HMRC – with the goal of raising £6.5 billion.
Transportation
There was significantly more focus on the Northern Powerhouse, with transport link advancements announced – in addition to HS2 – to drive investment to Birmingham
