Spring Budget 2024 and Property

by | Mar 7, 2024 | Blog

Two measures announced by Jeremy Hunt yesterday will affect certain property owners.

The first measure was to cut the higher Capital Gains Tax (CGT) rate on residential property disposal gains from 28% to 24% for higher rate taxpayers from April 2024. It is hoped that this would free up a tight property market, generating more sales which would not only pay for itself, but increase supply to benefit first time buyers.

Lack of supply is only one barrier to first time buyer’s entry to the property market. The other significant barrier is funding, particularly with increased mortgage rates. Whilst the measure will hopefully increase supply, it benefits property investors and landlords who are already within the sector rather than prospective entrants to the marketplace. Cutting SDLT rates for new entrants would have helped first time buyers more.

In the other measure affecting property owners, the system of tax breaks for property owners operating Furnished Holiday Lets (FHL) is to be phased out with effect from April 2025. FHL’s benefit from lower CGT rates on gains arising from property disposals, a more generous Capital Allowance regime, exemption from finance cost restriction, more beneficial loss relief rules and treatment of the income as relevant earnings for pension relief purposes. These breaks will disappear after April 2025, putting such operators on the same footing as longer term letting landlords.

Again, it is designed to increase the tax take, whilst hoping to increase the supply of property in certain areas of the country where first time buyers must compete with property investors, limiting their access to the property market. But those first time buyers will still have the same financing hurdles to overcome.

Martin TomesMartin Tomes Tax Accountant Nottingham is HSKSG’s Director of Tax.  He specialises in assisting and advising individuals and their businesses in all areas of taxation with an emphasis on tax planning, mitigation and compliance and also heads up the firm’s specialist property sector group.

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