The 2024 Budget has introduced major changes affecting property investors, landlords, and estate agencies alike. With the announcement of increased tax rates on buy-to-let properties and second homes, as well as adjustments to National Insurance and Inheritance Tax, investors may need to rethink their financial planning to manage the impact.

Stamp Duty Increases for Buy-to-Let and Second Homes

Starting tomorrow, the Stamp Duty rate on buy-to-let properties and second homes will increase from 2% to 5%. This change, introduced by Chancellor Rachel Reeves, aims to help address a £22 billion gap in the public finances. For landlords, the higher Stamp Duty rate will impact upfront purchasing costs, particularly for those investing in multiple properties. Estate agents may also see changes in demand as some investors reevaluate their strategies in light of these additional costs.

Capital Gains Tax Changes

In addition to Stamp Duty, Capital Gains Tax (CGT) on second properties has also been raised. The lower rate will increase from 10% to 18%, while the higher rate will rise from 20% to 24%. Investors selling second homes or buy-to-let properties will now face larger CGT bills, making it essential for property owners to consider the timing and profitability of sales more carefully.

Inheritance Tax and Employer National Insurance Contributions

The Chancellor also announced an extension to the Inheritance Tax threshold freeze, keeping the tax-free allowance at £325,000 until 2030. Although Inheritance Tax planning remains unaffected for smaller estates, larger estates will continue to face potential tax liabilities as asset values rise over time.

Additionally, employers in the property industry will see an increase in National Insurance contributions, which will go up from 13.8% to 15%. The earnings threshold at which these contributions apply has been reduced from £9,100 to £5,000, potentially affecting estate agencies’ staffing costs.

Budget Impact on Property Investments

These Budget changes will likely have a ripple effect on the property market, prompting investors to seek advice on tax-efficient strategies. At Adam Hayes Estate Agents, we’re here to support you in navigating these changes. Our team is available to provide guidance on how these tax increases might impact your property plans and what steps you can take to optimize your investment approach.