Autumn Budget 2024 | What Are the New Taxes for Landlords?

The Autumn Budget 2024 has introduced substantial changes for landlords, property investors, and business owners.

These reforms aim to rebalance the UK housing market, boost government revenue, and address ongoing challenges in affordability and market stability. However, the tax measures have far-reaching implications for property ownership, investment, and profitability.

This guide dives deep into the changes, helping landlords understand how these new rules will impact their finances and what steps they can take to adapt effectively.

Autumn Budget 2024 Changes in Landlord Taxes

1. Stamp Duty Land Tax (SDLT) Updates

One of the most significant updates in the Autumn Budget 2024 concerns Stamp Duty Land Tax (SDLT). The Higher Rates for Additional Dwellings (HRAD), applicable to landlords, property investors, and companies purchasing second homes or buy-to-let properties, will increase from 3% to 5%.

Practical Impacts on Landlords

The increase means property purchases will now incur higher upfront costs. For example:

A landlord purchasing a £200,000 property will now pay £10,000 SDLT, an increase of £4,000.
Buyers completing after 1st April 2025, when the residential nil-rate threshold drops back to £125,000, will face even higher costs.

Transitional Arrangements

To provide relief for transactions already underway, contracts exchanged before 31st October 2024 but completed later will still qualify for the old 3% rate. This exception prevents penalising landlords whose purchases were in progress when the new rates took effect.

Impact on Non-UK Residents

Non-UK residents will continue to pay the 2% surcharge on top of SDLT, bringing their effective rate to 7%. This move could discourage foreign investors, especially in high-demand regions like London, where international buyers play a crucial role.

Ripple Effects on the Property Market

The increased SDLT rates may lead to fewer buy-to-let purchases, especially in high-value areas like London and the South East. Reduced investment could, in turn, tighten the rental market, pushing rental prices higher as demand outstrips supply.

2. Inheritance Tax (IHT) Changes

Inheritance Tax (IHT) policies have undergone notable adjustments, with potential long-term effects on estate planning and wealth transfer.

Freezing of the Nil-Rate Band

The IHT nil-rate band, which exempts estates valued up to £325,000, will remain frozen until April 2030. This freeze, combined with rising property values, could push more estates into taxable territory.

Inherited Pensions Now Taxable

From April 2027, inherited pensions will be subject to IHT. Previously exempt, these pensions will now contribute to the taxable estate value, forcing individuals to rethink how they pass on wealth.

Changes to Property Reliefs

Starting in April 2026, the government will reform:

Agricultural Property Relief
Business Property Relief

Under the new rules, the highest relief rate of 100% will apply only to the first £1 million of combined business and agricultural assets. Any value exceeding this threshold will be taxed at a reduced 50% relief rate.

Offshore Trusts Lose Exemptions

Offshore trusts, historically used to shield assets from IHT, will no longer enjoy blanket exemptions. Transitional rules will provide flexibility, but landlords relying on these structures should review their options.

3. Capital Gains Tax (CGT) Adjustments

Capital Gains Tax (CGT) rates have also been revised, adding to the financial burden on landlords disposing of properties or other assets.

Higher Rates for 2024 Onwards

From 31st October 2024:

Basic-rate taxpayers will see CGT rise from 10% to 18%.
Higher-rate taxpayers will see an increase from 20% to 24%.

These changes align CGT rates for asset sales with property-specific rates, creating parity but increasing the overall tax burden.

Business Asset Disposal Relief (BADR)

Landlords looking to sell qualifying business assets will face increased rates for BADR:

From 6th April 2025, BADR rates rise to 14%.
From 6th April 2026, they rise further to 18%.

While this relief remains a valuable tool for some, most buy-to-let landlords operate through limited companies and are unlikely to benefit significantly.

3. Reforms to the Non-Dom Regime

The non-domicile (non-dom) regime will be replaced by a residence-based tax system starting in April 2025. This marks a significant shift in how foreign income is taxed.

Key Changes:

Immediate Taxation of Foreign Income: All foreign income will now be fully taxable from day one, removing the initial-year exemption.
Rebasing of Foreign Assets: Foreign assets owned before 5th April 2017 can be rebased, offering limited relief for disposals that meet specific conditions.

These changes aim to equalise the tax burden between UK residents and those benefiting from non-dom status. International landlords with UK investments may need to reevaluate their tax planning strategies.

Other Key Measures Affecting Landlords

The Autumn Budget 2024 introduced several other measures that indirectly affect landlords:

1. Late Payment Interest Rates

HMRC will increase its late payment interest rate by 1.5 percentage points from 6th April 2025, adding to the cost of unpaid tax liabilities.

2. National Insurance Contributions (NICs)

Employer NICs will rise from 13.8% to 15% for earnings above £175 per week.
The threshold for NICs contributions will be lowered to £5,000 annually, increasing payroll costs for many businesses.

3. Making Tax Digital (MTD)

The rollout of MTD for Income Tax Self-Assessment will expand to individuals with incomes over £20,000. While this change simplifies reporting, it imposes additional compliance requirements on landlords.

4. CGT on Carried Interest

The CGT rate on carried interest will rise to 32% by April 2026, impacting fund managers and investment professionals.

How Will These Changes Affect Landlords?

The combined effects of these changes are significant, forcing landlords to reassess their strategies:

Profitability Pressures: Increased taxes on property purchases, sales, and income may erode profit margins.
Rental Market Shifts: A reduction in property purchases could tighten supply, pushing rents higher.
Estate Planning Challenges: New rules for IHT, pensions, and property reliefs complicate wealth transfer planning.

Strategic Adjustments for Landlords

Explore estate planning tools like Family Investment Companies to mitigate tax impacts.
Consider reducing portfolios or diversifying investments to balance risks.
Consult financial advisors to navigate complex tax changes and optimise returns.

Conclusion

The Autumn Budget 2024 brings sweeping changes to the tax landscape for landlords, property investors, and non-UK residents. While the reforms aim to stabilise the housing market, they also introduce challenges that require careful planning and adaptation. Staying informed and seeking professional advice will be critical for landlords looking to navigate these new rules effectively.

FAQs About New Landlords Taxes

What are the new tax rules for landlords in 2024?

Landlords face higher SDLT rates, increased CGT rates, and new IHT rules on pensions and property reliefs.

How much has Stamp Duty Land Tax increased?

The SDLT rate for additional properties has risen from 3% to 5%, with transitional relief for ongoing transactions.

Will non-UK residents face higher taxes?

Yes, non-residents will pay a combined SDLT rate of 7%, potentially reducing foreign investment in the UK property market.

What are the key IHT changes?

Inherited pensions will now be taxable, and reliefs for business and agricultural properties will be reduced for high-value estates.

How can landlords manage the impact of these changes?

Landlords should seek professional advice, consider portfolio adjustments, and explore alternative investment structures like Family Investment Companies.