What does the government’s first budget mean for the property market? 

Chancellor Rachel Reeves delivered her first budget of the new Labour government on 30 October 2024. Her highly-anticipated speech revealed tax rises worth £40 billion, aimed at restoring public services and bringing stability to government finances. But what does the budget mean for homebuyers, landlords and investors? 

Stamp duty 

The big announcement on stamp duty – the tax paid when purchasing properties – was an increase in the second homes surcharge from 3% to 5%. The change took effect almost immediately – from Thursday 31 October. 

The surcharge is paid on top of standard stamp duty rates and applies to additional properties including holiday homes and buy-to-lets. The move will affect landlords looking to invest, raising concerns that it will reduce the supply of rental homes.  

While there were no increases to stamp duty for people buying their first or main home, the chancellor confirmed that the thresholds at which the tax becomes payable will revert to their normal rates from April 2025. 

In 2022, the thresholds were temporarily raised from £125,000 to £250,000 and from £300,000 to £450,000 for first time buyers. 

Capital gains tax 

Capital Gains Tax, which is charged on the increase in value on assets when sold, will increase – but not for the sale of property. The tax will go up from 10% to 18% for basic rate taxpayers, and 20% to 24% for higher rate payers – bringing it in line with existing property rates. 

Inheritance tax 

After much speculation around increases to inheritance tax, the chancellor announced that the current threshold will remain in place until 2030. 

Inheritance tax is charged at 40% on the assets of somebody who has died above a £325,000 threshold. This increases to £500,000 if property is left to a child or grandchild and married people inherit each other’s unused allowance, pushing this limit to £1million. 

Pensions, which are not counted for inheritance tax purposes, will be included from April 2027 and inheritance tax will be charged at 20% on estates containing business and agricultural assets worth more than £1 million. 

Read more about the budget on the BBC website.