With the Autumn Budget set for 30 October 2024, there is growing speculation about potential tax changes, particularly affecting landlords and property owners.  

As the government faces the challenge of reducing the deficit, while staying committed to election pledges, other tax changes are likely to come into focus.

In this article, we share our Tax team’s predictions regarding tax reforms that could impact landlords and property investors.

Potential increase in Capital Gains Tax (CGT) for landlords

One of the most significant expected changes is an increase in Capital Gains Tax (CGT), especially for landlords. CGT is levied on the profit made when selling a property.  

Currently, CGT rates for landlords are as follows: 

• 18% for basic rate taxpayers. 
• 24% for higher and additional rate taxpayers. 

However, to address the fiscal deficit, the Chancellor may propose raising CGT rates on all residential property sales to 30%. Alternatively, the government might align CGT rates with income tax rates. This would have the following implications: 

• Basic rate taxpayers would see an increase in CGT from 18% to 20%. 
• Higher rate taxpayers would experience a much larger rise, with CGT jumping from 24% to 40%. 
• Additional rate taxpayers would face an even steeper increase, from 24% to 45%. 

Such changes would significantly raise the tax burden on landlords selling their properties, particularly those in the higher income brackets.

Inheritance Tax (IHT): Changes on the horizon?

Currently, IHT is applied at a rate of 40% on estates valued above £325,000. Landlords and property investors with valuable estates are already subject to this tax, but upcoming changes could increase the burden. 

There are rumours of two potential adjustments: 

• Increasing the Inheritance Tax rate above the current 40%. 
• Lowering the £325,000 threshold, making more estates subject to IHT. 

In addition, some speculate that the government could introduce a further Capital Gains Tax on inherited properties, adding another layer of taxation for heirs and beneficiaries. Although only about 4% of estates are currently liable for IHT, these changes could increase the number of estates affected.

Stamp Duty and council tax: Unlikely to change

There have been discussions in the past about altering Stamp Duty Land Tax (SDLT) or restructuring council tax to be based on property values, but such changes seem unlikely in this upcoming Budget. Despite being considered as potential revenue-raising measures, neither SDLT nor council tax adjustments are expected to be included in this round of reforms. 

Our final thoughts

The Autumn Budget 2024 is expected to introduce significant tax changes that will particularly affect landlords and property owners.  

The most pressing concern is a potential increase in Capital Gains Tax, with the possibility of Inheritance Tax reforms on the horizon. Both will lead to increased costs for those selling properties or passing on estates to heirs.  

While changes to SDLT and council tax seem off the table, landlords and property investors should stay alert to any announcements on 30 October that could influence their financial strategies. 

Stay tuned for: 

• Our key takeaways that will be shared on the day of the Budget announcement.  
• Our full Budget Summary that will be shared shortly after the Budget announcement.