Rushi Sunak delivered the new budget via the Autumn Statement on 17th November 2022. The statement includes reforms to the Capital Gains Tax and Stamp Duty Reduction.

With a reduction of £30 billion in public spending, the aim of the Autumn Government announcement is to mitigate inflation and the current high-interest rates.

Autumn Government Changes and Updates

Here at Hancock & Partners, we continue to stay up to date with new developments within the property industry.

Keep reading for our summary of the main points of the Autumn Statement as we explore how they will impact landlords and the property market alike…

Stamp Duty Reduction Until 2025

From September, buyers have been exempt from paying Stamp Duty on property purchases up to £250k. These changes were introduced as part of the ‘mini-budget.’

It has now been confirmed by the Autumn Statement that this Stamp Duty reduction will remain in situ until 2025.

This makes it desirable to purchase chosen properties before the Stamp Duty is revoked back to its previous threshold of £125k. Confirmation of the reduced Stamp Duty may increase property investment and sales volume until 2025, encouraging buyers to streamline their property search before the previous threshold is reintroduced.

Capital Gains Tax Allowances Cut From 2023

Currently, the Capital Gains Tax exemption stands at £12,300. This allowance will be reduced to £6,000 from April 2023 and drop further to £3,000 from April 2024.

Any ‘gains’ that exceed this exemption will be taxed at the existing rates of 20% or higher.

What does this mean for investors? This announcement may result in some landlords selling properties before the higher Capital Gains Tax is payable. It could also make it more viable for landlords to trade as a limited company to claim tax reliefs to reduce or delay any Capital Gains Tax impact.

However, vendors may achieve a good value for their property. Purchasers will be equally as keen to complete while the Stamp Duty reduction is in place.

Energy Price Guarantee Extension

The current Energy Price Guarantee scheme will remain in situ from April 2023. The guarantee currently ensures that household utilities are capped at £2,500.

From April, the cap will increase to £3,100.

There will still be other Government support for lower-income households and rental tenants, such as cost of living payments of up to £900 and winter fuel payments of up to £600. Those struggling with heating bills may be eligible for further support, such as those receiving tax benefits. The Energy Bills Support Scheme also provides a £66 discount for eligible households, providing a £400 discount for over six months of energy bills.

Income Tax Threshold

The Treasury expects to increase tax revenues in 2023, resulting in more people tipping over into a higher income tax bracket.

The Tax threshold of £12,570 will be frozen until April 2028, along with National Insurance and Inheritance Tax thresholds.

The annual Dividend Allowance will drop from £2,000 to £1,000 commencing from April 2023 and to £500 from April 2024.

The additional-rate income tax threshold will apply to earnings from £125,140 rather than the previous £150,000. Lowering the additional-rate threshold will result in more earners paying the 45% tax bracket.

To potentially reduce your income tax bill, contribute more to your pension. If you cross into a higher tax band, a personal pension contribution could mean your adjusted net income falls below the threshold.

2023

In 2023, the government is predicted to publish further details about the rental reforms and potentially provide guidance about its plans to increase EPC rating requirements for rental properties. Currently, privately rented properties must achieve a minimum EPC rating of E. The government aspires for homes to meet a minimum EPC rating of C.

To learn more about how the recent government announcements may impact you or your property portfolio, get in touch today. Please call our friendly team now on 01243 531155.