02.10.2024
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The Chancellor of the Exchequer Rachel Reeves is set to deliver the much touted first Labour Budget on the eve of Halloween – the 30 October 2024 in a speech at 12:30pm. Amidst concern over a £22bn “black hole” in finances, and “difficult decisions” on tax and spending, DHA's Jessica Bache sets out below what this means for the planning and built environment sector.
Capital Gains Tax
Capital Gains Tax is charged on profits made when selling an asset. In planning terms, this includes buy-to-let properties, second homes, land, inherited properties and business premises. The amount you pay depends on personal income and profit received from the sale. For 2024/25 the first £3,000 you earn from the sale of a property is not taxable. For gains on property less than £50,270, the capital gains tax rate is 18% for 2024 - 2025. Over £50,270, the capital gains tax rate is 24% for 2024 – 2025. Some suggest that the Capital Gains Tax could be increased further for the Government to earn more revenue.
Council Tax Reforms
From April 2025 the amount that second homeowners pay for Council Tax will increase. Whilst the Government have confirmed that they will not alter the Council Tax discount, they have not ruled out reforming the current Council Tax band system. However, ThisIsMoney have said that that the current Council Tax band system could be replaced with a flat 0.5% tax based on a home’s value.
First Time Buyer Stamp Duty Relief
Introduced as a temporary measure until April 2025, the higher threshold of stamp duty for first time buyers increased from £300,000 to £425,000 in September 2022. Whether the threshold for stamp duty changes, or is removed, could also be a feature of the forthcoming Budget.
Freedom to Buy
A key feature of Labour's manifesto, was its promise to get 80,000 young people on the housing ladder. Labour suggested that it would be open to first-time buyers. This means that the Government would act as a guarantor for people who cannot afford large deposits. Currently, the Mortgage Guarantee Scheme supports the lending market to offer 95% mortgages on properties costing up to £600,000. However, it remains to be seen if further detail on this will be set out in the Budget.
Right to Buy
The Government are consulting on reform of the Right to Buy new social housing while reducing the discount for buying existing social housing. Rayner previously stated that “the changes the previous government made has made it a lot easier with a huge discount for people to buy the social housing and we just cannot replace them”.
Conclusion
These potential changes sit within the context of a number of other spending commitments including plans to appoint 300 new planning officers. The property market is still stabilising following the spook in the market when the 2022 mini-Budget proposed unfunded tax cuts. So, the challenge for the Labour government will be provide much needed stability and investment in the planning and built environment sector in the Labour Budget.
Watch this space for further news over the coming weeks.....In the meantime, if you would like to discuss any of the above in more detail, please feel free to contact DHA's Jess Bache.
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