2024 Budget: Key Tax Changes for Property Investors and Landlords Explained
The full details of Labour’s much-anticipated October Budget were finally released today, putting an end to weeks of speculation over potential tax shifts. What new impacts will property investors and landlords face following Reeves’ announcements?
Here’s a summary of Reeves’ key announcements impacting property investors, covering:
- Stamp Duty surcharge increase
- Capital Gains Tax adjustments
- Inheritance Tax threshold extensions
Stamp Duty Land Tax (SDLT) Hike to 5%
In an unexpected move, Reeves raised the SDLT surcharge on second homes and residential investment properties from 3% to 5%, effective tomorrow (31st October 2024). With no transition period, landlords and investors must respond to these changes immediately.
Additionally, Reeves confirmed that the temporary Stamp Duty thresholds will revert on 31st March 2025. The 0% SDLT threshold will decrease from £250,000 back to £125,000, while the first-time buyer (FTB) threshold will also drop from £425,000 to £300,000 in March 2025. Consequently, aspiring homeowners may find themselves waiting longer to step onto the property ladder, increasing demand for rental options.
This increase in second home and investment property surcharges presents challenges for landlords, potentially reducing available rental housing stock.
Capital Gains Tax (CGT) Changes
Although Reeves maintained existing CGT rates on property (18% for lower-rate and 28% for higher-rate taxpayers), she raised CGT rates on shares and other assets from 10% to 18% for lower-rate taxpayers, and from 20% to 24% for higher-rate taxpayers. This change aims to generate £2.5 billion to support public services.
Inheritance Tax (IHT) Adjustments
The current £350,000 IHT threshold freeze, initially introduced by the Conservative government, will continue for two more years, extending to 2030. Additionally, Reeves will close a perceived “loophole” by bringing inherited pensions into the IHT system from 2027.
Income Tax Thresholds Update
Reeves announced that the freeze on Income Tax thresholds will not be extended. From 2028, thresholds will rise in line with inflation, helping to limit the fiscal drag caused by more taxpayers falling into higher brackets.
Changes to Business Rates
Labour’s decision to reduce the temporary 75% relief on business rates to 40% (capped at £110,000 per business) will ease the impact on retail, hospitality, and leisure sectors, though partial relief will remain through 2026.
Fuel and Alcohol Duty
In response to the ongoing cost-of-living challenges, Reeves has frozen Fuel Duty for another year. She also announced a 1.7% reduction in draught duty to support the hospitality industry.
Increase in Employer’s National Insurance Contributions
Although Reeves pledged no increases to Income Tax, employee NI, or VAT, she introduced a 1.2% rise in employer’s NI from April 2025, along with a reduced threshold for contributions from £9,100 to £5,000. To support small businesses, the Employment Allowance will increase from £5,000 to £10,500, ensuring many smaller employers will avoid these NI costs next year.
£500 Million for Building 5,000 Social Homes
In a major step for social housing, Reeves committed £500 million to support the construction of 5,000 additional social homes, adding to the Affordable Homes Programme. By curbing Right to Buy discounts, Reeves aims to retain more council homes in the social sector. A larger £5 billion investment in housing includes a £3 billion boost for small house builders and a recruitment drive to enhance planning capabilities.
