What Will Be in the Autumn Budget? Key Predictions and Expectations
What Will Be in the Autumn Budget? Key Predictions and Expectations
When Chancellor Rachel Reeves strikes the iconic Budget pose on 26th November – arm outstretched, red dispatch box in hand – she will be on the cusp of delivering one of the most anticipated Budgets of the decade.
Contained in the leather-covered, scarlet box will be Reeves’ speech that, when delivered to the House of Commons, will shape the future and potentially shore up the nation’s finances. The Chancellor will be looking to plug an estimated £22bn shortfall in the Government’s finances
The run-up to every Budget is the ‘season for speculation’, with experts looking for clues in whispers, leaks and interviews. This Autumn Budget has the potential to be laced with property announcements, and all manner of predictions have been swirling.
Viewber has been following the forecasts with interest, with the following all rumoured to be in the running.
Stamp duty land tax
Election pledges are out the window, with Labour looking set to break its ‘no tax hikes’ promise. Stamp duty land tax (SDLT) appears to be a leading scapegoat, with some of the fiercest speculation around this levy.
Rumours have included scrapping SDLT for owner-occupiers and replacing it with a property tax that is paid for by sellers of homes worth more than £500,000, while others think the higher rate of SDLT paid by additional property buyers, such as landlords, may increase.
Capital gains tax
Capital gains tax (CGT) is usually paid by sellers of a property that is not their main residence, such as a buy-to-let or a holiday home. The tax is a percentage of any profits made upon a sale. How much CGT a seller pays is based on their income tax band, with percentages ranging from 18% to 32%.
The Chancellor could increase the percentages to generate more income. There is also a wild rumour that Reeves could apply CGT to any profits made when the most expensive permanent residences are sold – homes selling for £1.5 million or more – something that has been referred to as a mansion tax.
Council tax
Council tax bands were last evaluated 34 years ago and house prices have risen dramatically since. Some experts think that a mass audit of property values would be a good income generator for the Government. A rumoured easier option would be the doubling of council tax for the most valuable properties – those in bands G and H (homes worth more than £750,000).
Inheritance tax
Property taxes are bookends – pay them when you buy and pay them when you die. Inheritance Tax (IT) is what relatives are left to contend when people pass away and a property usually makes up the majority of an estate’s value. The current rate of IT is 40% – applied to the portion of an estate above the current nil-rate band of £325,000 (or that of an inherited tax spouse exemption).
There’s also a residence nil-rate band of £175,000, which is applicable if the deceased left a property to direct descendants, including children or grandchildren. While the Chancellor could increase IT above 40%, it is more likely she will adjust the nil-rate bands so more of an estate’s value is taxed.
The Chancellor is also thought to be mulling over a plan to apply inheritance tax if the giver dies within 10 years of making the gift, instead of the current seven years. This would mean more first-time buyers who rely on a gifted deposit provided by a parent or a grandparent would face an IH bill for the kind gesture.
Income tax & National Insurance (NI)
Freezing income tax and NI thresholds may feel like a win for many, as there would be no immediate decrease to the thresholds, but this move would carry a sting in its tail. As salaries rise, an income tax and NI freeze would mean more people would be liable to pay income tax.
This would be a blow to employers, like estate and letting agents, property auctioneers and suppliers to the industry, as they would potentially have to pay more secondary Class 1 NI. A freeze may also drag more people into higher tax brackets, including landlords. A Government leak also revealed applying NI to a landlord’s rental income is on the table.
ISA changes
The headline rumour centres on slashing an ISA’s annual tax-free allowance from £20,000 to £10,000 but other changes affecting first-time buyers are being considered. The LISA (lifetime ISA) was introduced in 2017 for two uses: to save a deposit to buy a first home, or to save for retirement.
A common complaint is that the current maximum property price for which a LISA can be used without penalty – £450,000 – hasn’t changed since LISAs were introduced, although house prices have increased considerably. Finance experts are hoping the price threshold will be revised upwards in the Budget. It’s also possible the Chancellor will slash how much can be invested annually in a LISA as the current £4,000 per annum is predicted to cost the Government £3bn over five years.
Grab a cuppa and tune into the Budget coverage around 12 noon on Wednesday 26th November. We will follow up the announcement with a blog confirming the pivotal property changes.
