Landlords hit by stamp duty surcharge increase to 5% in Budget

In a move that could severely damage the private rented sector (PRS), the Chancellor Rachel Reeves announced in the Budget that the stamp duty surcharge on additional homes will increase to 5% from tomorrow.

The rise from 3% will hit landlord profits – and likely undermine desperately needed landlord investment in the PRS – and lead to fewer homes for rent.

ARLA Propertymark president, Angharad Truman, said: “We continue to see a growing disparity in the number of private rented homes available against a backdrop of increasing demand from tenants.

“Therefore, it is disappointing to see that the UK Government did not address this fundamental issue in its Autumn Budget and instead has announced yet another blow for landlords by increasing Stamp Duty on second homes.”

However, fears that landlords selling rented homes would have to pay a much higher rate of Capital Gains Tax (CGT) have failed to materialise in Ms Reeves’ first Budget as Chancellor.

Critics had feared that the higher rate of CGT would rise to 40% – up from 24% currently.

However, Ms Reeves announced that the lower rate of CGT will rise from 10% to 18%, and the higher rate from 20% to 24%.

But in some good news for landlords, the rates on residential property will remain at 18% and 24%.

Also, Capital Gains Tax rates on carried interest will rise to 32% from April 2025.

Budget will raise taxes by £40bn

The Budget aims to raise taxes by £40bn and Ms Reeves also revealed that the inheritance tax threshold will be frozen by another two years to 2030.

That means the first £325,000 of an estate can be inherited tax-free – which rises to £500,000 if the estate includes a residence passed to direct descendants.

The move will also see that figure increasing to £1m when a tax-free allowance is passed to a surviving spouse or civil partner.

From April 2026, the first £1m of combined business and agricultural assets will continue to attract no inheritance tax.

For assets of more than £1m, inheritance tax will apply with 50% relief, at an effective rate of 20%.

Hike in employers’ national insurance

The Chancellor confirmed a hike in employers’ national insurance from 13.8% to 15% – a ‘decision not taken lightly’.

However, the threshold has fallen to £5,000 – from £9,100.

That will hurt a lot of smaller business, critics warn, though Ms Reeves says the move will raise £25bn.

National Insurance, VAT and income tax ‘for working people’ have not been increased.

Highlights from the Autumn Budget

Other highlights from the Autumn Budget include:

• Budget will raise taxes by £40bn
• Inheritance tax thresholds will be frozen for a further two years until 2030
• National Insurance Contributions for employers will increase from 13.8% to 15% from April 2025
• The threshold for businesses to start paying NI on workers’ earnings will be lowered from £9,100 to £5,000
• Minimum wage will be increasing by 6.7% to £12.21, while for those aged 18-20 will get a 16.3% bump to £10 an hour
• Increasing the lower rate for CGT from 10% to 18%, with higher rate going from 20% to 24%
• There’s no extension on the freeze in income tax and NI thresholds
• £5bn for investment on housing – including a £3.1bn increase to the Affordable Homes Programme
• Non-dom tax regime abolished
• Fuel duty will be frozen next year
• £1bn to extend the Household Support Fund from next year.

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