The October 2024 Budget - Key Changes for Landlords

Capital Gains Tax (CGT) Changes: What Landlords Need to Know

One of the biggest talking points leading up to the budget was whether or not the government would overhaul Capital Gains Tax (CGT) rules for residential property.

Whilst the Chancellor has confirmed that the rates of CGT will be rising (from 10% basic / 20% higher rate to 18% / 24%), the good news for landlords is that, for now, CGT for residential property remains unchanged.

This means landlords can continue to benefit from the current CGT rates when disposing of their properties. If you've been concerned about disposing any part of your portfolio due to uncertainty around CGT, you can rest easy for a while longer. However, as always, CGT is one of those taxes that can change rapidly—so keeping your long-term plans flexible remains critical.

Inheritance Tax (IHT): New Business Property Changes for Landlords

The Chancellor did, however, introduce new and unexpected rules around Inheritance Tax (IHT), specifically relating to business property. From April 2026, the Chancellor is introducing a £1 million limit for business property passed on as inheritance. After that, IHT is payable, but subject to a 50% relief applied on the portion above this threshold, meaning an effective rate of 20% on the value of the portfolio above £1 million. For landlords with larger portfolios operating through a limited company, this new cap could have implications on how you plan your estate.

Previously, full IHT relief was often available for business assets, meaning that those with large portfolios could pass them on with minimal tax liabilities. Now, if your business assets exceed £1 million, IHT needs to be considered. This change means careful estate planning is now more important than ever, and those with sizeable portfolios may want to explore the impact of today's changes.

Stamp Duty Land Tax (SDLT): Changes for Landlords

In a move designed to cool the buy-to-let and second-home market, the government has announced an immediate (and again, unexpected) increase in the Stamp Duty Land Tax (SDLT) surcharge for second homes. Before today's budget, this surcharge stood at 3% for UK investors. From 31st October 2024, this stamp duty surcharge will increase to 5%.

Updated Stamp Duty Rates for Landlords from 31st October 2024

For landlords looking to expand their portfolios, this is a cost increase that needs factoring into any new purchases. For example, if you're buying a property worth £295,000 as a buy-to-let, you'll now face an additional £5,900 in SDLT surcharge compared to before today's Budget.

The intention behind this move is clear—the government is looking to deter speculative purchases and make room for more owner-occupiers in the housing market. For landlords, this means that every new acquisition needs even more careful analysis to ensure it remains financially viable.

Impact of the 2024 Budget Changes on Landlords

While CGT staying put is a relief, the changes to IHT and SDLT will likely require a re-evaluation of your strategies. Here are some actions to consider

Estate Planning Review

If your property business is worth over £1 million, consult a tax advisor to explore how to mitigate the impact of the new IHT rules. This could involve changing share structures or even gifting assets during your lifetime to reduce the tax burden. Book a call with our team today.

New Purchases

With the SDLT surcharge increasing, it's vital to ensure that any new acquisitions have strong yields that can absorb these upfront costs. For many, this might mean pivoting to properties that can deliver higher returns.

Consider Incorporation

For those not yet operating through a limited company, now may be the time to look at incorporation, not only for the CGT advantages but also to simplify IHT planning. Limited companies remain a tax-efficient vehicle, especially in light of the new £1 million IHT cap.

Final Thoughts on the 2024 Budget Changes for Landlords

The October 2024 Budget brought a mix of continuity and change. While landlords can breathe a sigh of relief over the lack of CGT changes, the increased SDLT and new IHT rules highlight the ongoing need for proactive tax planning. As always, staying informed and agile is key to making the most of your property investments in a shifting tax landscape.

If you're feeling uncertain about how these changes might impact your strategy, Provestor's tax consultations can help. In just 45 minutes, our property tax experts can guide you on structuring your business and staying tax-smart—even when the rules change. Find out more here.