UK budget 2024: property law considerations

As our regular readers will know, we in the UK Real Estate team has been waiting with interest to hear the first Labour Party budget now that they are the incumbent.

In the run up to yesterday’s fiscal announcements, we have had a flurry of activity by those clients who either wanted to complete transactions on an expedited basis, or those who have instructed us to pause work until the budgetary landscape was clearer.

Multiple news outlets from CNN though to the BBC have latched on to the headline grabbing £40bn in tax rises, whilst specialist tax advisers are generally saying the news was not good, but not as bad as it could have been. It appears the main burden of taxation will be borne by businesses.

Although we in the UK Real Estate team are not tax advisers, we have read considerable commentary around the income taxation and inheritance taxation of pensions, with some suggesting pension monies should be spent rather than retained and gifted through wealth planning.

From our perspective, it will be interesting to see if the potential spending of pensions translates into property purchase instructions, given there is still stamp duty to pay on acquisition. A buyer would presumably need to consider whether the new tax burdens outweigh any stamp duty levied, but again this remains to be seen.

On the subject of stamp duty, two key points arise.

The first point is that stamp duty surcharges on the acquisition of second properties will increase from 3% to 5% with effect from today (31 October), and the second point is that stamp duty thresholds will be changing to lower levels (increasing the tax take) from March 2025, with further information to follow from government.

We leave to tax experts the details around the taxation of non-doms (or more accurately the introduction a residence based tax scheme) given that again further clarification is awaited.

There will be some additional thought needed around the increase in the rates of Capital Gains Tax also.

Practically speaking, we certainly expect activity levels to pick up from those clients who were waiting for taxation clarity.

As and when further relevant information comes to light, we look forward to sharing our thoughts on how this may affect our client’s instructions.

If you need further information or legal advice, including conveyancing services in England, please contact our dedicated UKRE team: Anna Douglass, Alastair Hargreaves, Caren Vidamour, and Hannah Damant, who will be delighted to assist.