Individuals

On a personal level, individuals whose home is worth more than £2 million will be subject to an annual charge going forwards. For properties worth £2 million or more this will be £2,500 per annum, increasing to £7,500 per annum where the value exceeds £5 million. We understand this will be collected in the same way as council tax.

For those who invest in property in their personal names, the rate of income tax will increase from 6 April 2027 by 2% irrespective of whether you are a basic rate, higher rate or additional rate taxpayer. For those investing in residential property, any mortgage interest relief will increase to 22% from the same date.

Inheritance tax (IHT) thresholds are to remain frozen and therefore we will likely see more individuals coming into the scope of IHT where property prices continue to rise, even if IHT reliefs such as Business Property Relief (BPR) and Agricultural Property Relief (APR) are available, which is highly unlikely.

Although no changes were announced in the Autumn Budget it is worth remembering that pensions will be brought into the scope of IHT from 6 April 2027. In many cases, pensions have been used to hold commercial property, often used in an individual’s trading business. With no APR or BPR being available to pensions a review of your pension arrangements may be advised.

Other announcements

The Chancellor confirmed that the rate of corporation tax will remain the same. For those investing in commercial property, the ability to claim tax relief on qualifying assets, either through the capital allowances or structures and buildings allowance regimes, will continue with some small changes to the former.

Business rates will see some changes with the extension of the small business rate relief grace period from one to three years, expansion of the Supporting Small Business scheme, extensions on the business rates retentions and the introduction of a higher value multiplier for eligible retain, hospitality and leisure properties. A new transitional relief for business rates will also be introduced where increases are due as a result of the revaluations proposed from 1 April 2026.

Will the Autumn Budget lead to investment opportunities?

As we expected Rachel Reeves’ announcements today highlighted additional tax costs which are coming for those holding or investing in real estate. Whilst this is the case, the planned sale of surplus defence assets could lead to an opportunity for those looking to enter or expand their real estate interests in the UK.

If the Budget has raised any questions for you, book your place on our question time webinar this Friday at 9:30am.  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.  