Chancellor Rachel Reeves has delivered the first Labour budget since winning the election. Not only is this the first Labour budget in 14 years, but it’s the first time Britain has had a female Chancellor!

Raising taxes by the highest amount since 1993, the Chancellor announced significant changes and plans to strengthen the Health Service, Economic Stability and an emphasis on protecting working people.

We set out below the main points from the budget impacting the property sector and how any future plans for our clients buying or selling may be impacted.

What was already in place before the budget?

What has changed?

Corporate Bodies Higher Rate –
For residential dwellings costing more than £500,000, purchased by corporate bodies, Stamp Duty Land Tax was charged at 15%, from 20 March 2014 to 30 October 2024.
The 15% higher rate for corporate bodies has now been increased to 17%, however relief is still available, where certain conditions are met, for property used for rental purposes or bought by a property developer.

Additional Dwellings Higher Rate –
Between 1 April 2016 to 30 October 2024 the 3% additional rate applied to purchases on additional properties.
The 3% additional rate has now been increased to 5% on 31 October 2024.
Where contracts have been exchanged before 31 October 2024 but complete on or after the 31 October 2024 the additional rate of 3% will apply instead of 5%.

As an example: on a £300,000 second property, you’ll pay:
5% on the first £250,000 (= £12,500)
10% on the remaining £50,000 (= £5,000)
Total Stamp Duty Land Tax payable from 31st October 2024 will be £17,500

What hasn’t changed?

First Time Buyers
Previously the 0% threshold for First Time Buyers was set at £300,000. This was increased to £425,000 in September 2022. This threshold was always set to revert to £300,000 on 1st April 2025, but there had been rumours that Labour were intending to scrap the increased threshold as part of the budget.

Fortunately for First Time Buyers this was not the case, and the threshold is still not due to reduce back to £300,00 until Spring next year.

This means First Time Buyers have until 1st April 2025 to take advantage of the increased threshold, which is great news!

What else is changing?

There are a couple of other points worth mentioning –

Agricultural and business property relief
From April 2026, agricultural property relief and business property relief will be reformed. The highest rate of relief will continue at 100% for the first £1 million of combined business and agricultural assets on top of the existing nil-rate bands, fully protecting the majority of businesses and farms. The rate of relief will reduce to 50% after the first £1 million.

Inheritance tax thresholds
Inheritance tax thresholds will be fixed at their current levels for a further two years until April 2030. More than 90% of estates each year will not pay inheritance tax. From April 2027 inherited pension pots will be subject to inheritance tax. This removes a distortion which has led to pensions being used as a tax planning vehicle to transfer wealth rather than their original purpose to fund retirement.

Capital Gains Tax
Capital Gains Tax (CGT) will increase from 10% to 18% for those paying the lower rate, and 20% to 24% for those paying the higher rate. These new rates will match the residential property rates, which will remain unchanged at 18% for the lower rate and 24% for the higher rate.

Right to Buy
The Right to Buy was introduced in 1980 with the discount applied significantly increased in 2012, offering council tenants in some cases up to 70% off their home purchase. With a view to increasing the supply of social housing, Right to Buy discounts are now being reduced and legislation is due to be passed on 21 November, returning the discounts to the pre-2012 levels.
The government have advised these discounts will be kept under review and could be changed again in 2026-2027 if needed.

Planning Reforms
The Chancellor also announced planning reforms to “get Britain building again” and said Labour will reform the National Planning Policy Framework (NPPF) by the end of the month. She also committed to employing 300 new planning officers in local authorities to help support the planning system.