Chancellor Rachel Reeves has presented this year’s Autumn Budget, unveiling a range of changes to employers’ national insurance contributions, inheritance tax, capital gains tax, and other reforms. Leading with plans to raise taxes by £40 billion to fill a £22 billion “black hole” in public finances and boost economic growth, most of what was announced was teased months prior. Certainly, the rhetoric the Chancellor framed around the budget yesterday, was one in which without such cutting measures Britain could not rebuild. An attitude that has formed divisive opinions across the nation.
On the housing front, she’s pledged over £5 billion to support housebuilders, enhance the affordable homes programme, and invest in site development across the UK.
In a notable change to stamp duty, the surcharge on second homes and buy-to-let properties has jumped from 3% to 5%, which started yesterday. However, the lack of a freeze on overall stamp duty thresholds means homebuyers should prepare for those thresholds to rise as expected at the end of March 2025.
Capital gains tax will be increased. The lower rate will increase from 10% to 18%, while the higher rate will rise from 20% to 24%. However, there will be no changes on the 24% capital gains rate imposed on second properties. The government has also extended the freeze on inheritance tax threshold, allowing £325,000 to be passed on tax-free. Additionally, there will be a £2 billion tax boost from reformed reliefs for business and agricultural assets, with a 20% inheritance tax applied to those over £1 million.
Ms. Reeves also reaffirmed Labour’s commitment to building 1.5 million homes during this parliament, with £5 billion allocated for housing next year. This includes a £500 million boost for the affordable homes programme to create 5,000 additional homes and £3 billion to support small and medium enterprises and the build to rent sector through housing guarantee schemes. Right to buy discounts will be reduced, and local authorities will keep all receipts from sales to help preserve existing council housing stock.
We’re encouraged by the government’s announcement of additional funding for SMEs and its commitment to planning reforms, which could help reverse the decline in house building we’ve seen in recent years. However, the lack of support for homeownership, particularly for younger households struggling to enter the housing market, is worrying to say the least. While investments in planning and affordable housing are promising steps forward, they may fall short when it comes to tackling the housing crisis. As always, we’ll be here to keep on eye on how these developments unfold and what they might mean moving forward.
