Significant changes in property taxation afoot – Spring Budget 2024

Published by Jo White on 6 March 2024

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Jeremy Hunt announced some big changes to taxes affecting those owning, buying or selling (mainly) residential property. 

Stamp Duty Land Tax: Multiple Dwellings Relief (MDR) to be abolished

For those acquiring multiple residential properties in the same transaction in England and Northern Ireland, MDR is to be abolished.  

The change applies to property transactions with an effective date of transaction (generally completion) from 1 June 2024 with transitional rules applying, so those who have exchanged contracts before today (6 March 2024) will be able to benefit from the existing rules irrespective of when they complete on the property purchase.   

This measure will increase the SDLT liability for those acquiring more than one residential property in a single or linked transaction. For example, an individual who is acquiring a replacement home in England for £800,000 which includes a qualifying annexe will pay an additional £12,500 of SDLT following the abolition of these rules. 

Furnished Holiday Lets (FHL) abolition of rules

Also, the abolition of the preferential FHL rules was announced to take effect from 6 April 2025, bringing these types of properties into the ‘standard’ tax framework that applies to the letting of other types of residential property. The current attractive tax reliefs available to those running an FHL – such as full interest relief, capital allowances and potentially lower rates of Capital Gains Tax – will no longer be available from this date. 

For further detail click here.

Capital Gains Tax (CGT) – reduced higher rate

Whilst these two measures are increases in tax, the Chancellor announced that the rate of CGT payable on the disposal of residential properties will reduce from 28% to 24% for gains realised after 6 April 2024. This will be relevant for higher rate and additional rate taxpayers, along with trustees and personal representatives. The basic rate of CGT payable on residential property disposals will remain 18%.   

Inheritance tax relief for holding agricultural property

Finally, whilst not mentioned by the Chancellor when he spoke earlier today, it has been confirmed that inheritance tax reliefs available on property used for the purposes of agriculture will be extended to include land which is managed under an environmental agreement with, or on behalf of, the UK government, Devolved Administrations, public bodies, local authorities or approved responsible individuals. The relief will be available through the extension of Agricultural Property Relief, allowing up to 100% tax relief against the agricultural value of the qualifying land.  

These rules will be effective from 6 April 2025 but will include agreements in place on or after 6 March 2024. Clarity on the tax treatment relating to income from these schemes is yet to be published. However, it has been confirmed that the government will be establishing a joint working group between HM Treasury, HMRC and industry representatives shortly. 

Although the changes represent higher tax costs for purchasing property, and the removal of tax reliefs for furnished holiday lets, the announcements will result in a simpler set of rules allowing individuals to navigate the tax system more easily. With property transactions already being a significant investment, it will become ever more important to understand the long-term tax implications and therefore return a property investment will generate. For those currently involved in Furnished Holiday Lettings, maximising tax reliefs available before the change will be crucial. 

Watch our Spring Budget question time webinar

Following the Spring Budget, our panel of specialists examined the announcements made by The Chancellor, discussing what these changes mean for you. They also answered questions from our live audience. This webinar is now available to watch on demand here.

Alternatively, if you would like any further information or guidance on this topic, get in touch with your usual Kreston Reeves contact or contact us here.

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