Autumn Budget & the Property Sector

Almost a week after the Chancellor Jeremy Hunt presented his Autumn Budget 2022, we look at the content of the ‘mini budget’ and how it will impact the housing sector.

From the extended support for energy bills to a number of tax changes, there’s a lot for landlords and property professionals to think about.

Capital Gains Tax Relief

From 2023, the exemption for capital gains tax will be cut from £12,300 to £6,000, and then cut again to £3,000 from April 2024.

Stamp Duty Land Tax (SDLT) Cut

The Chancellor announced that “the OBR expects housing activity to slow over the next two years, so the stamp duty cuts published in the mini-budget will remain in place but only until March 31 2025.”

This means that the threshold of the price of a property before stamp duty is paid will stay at £250,000, up from the previous threshold of £125,000 - but now for a time limited period.

Rent Cap for Social Housing Sector

The social rented sector is foreseeing rent increases of up to 11% next year, and as such the government has announced a 7% cap on rent increases for social rents in 2023-24. This will help tenants save around £200 next year.

It is important to note that the rent cap announced in the budget does not apply to shared ownership rents or private rented sector rents.

Directors Dividend Allowance to be cut from 2023

The dividend allowance for directors will be cut from £2,000 to £1,000 in 2023, and then to £500 in April 2024.

This affects landlords using limited company structures to run their business portfolio, and the dividends they take from the company as well as payments made to their shareholders.

Threshold for top rate of income tax cut

The higher rate tax band payers will start paying a 45% top rate of income tax, as the threshold will be brought down from £150,000 to £125,140.

This means that "those earning £150,000 or more will pay just over £1,200 more a year," says Hunt.

Income Tax, NI, and IHT thresholds frozen until 2028

Freezing the current allowance threshold for income tax and national insurance tax means that more people will move into higher tax brackets as their wages increase.

Inheritance tax (IHT) will be frozen at the current rate of £325,000. However, as a result of higher house prices, some estates may be liable for inheritance tax.

National Living Wage Increases

Currently, the National Living Wage in the UK is £9.50 an hour for those over the age of 23. This will rise by 9.7% to £10.42 - an annual pay rise worth £1,600.00.

Employer National Insurance threshold frozen until 2028

This threshold will equate to employers paying more as wages increase and more fall into the higher brackets.

The Chancellor announced that the government will keep the Employment allowance at its current higher level of £5,000.

The Energy Price Guarantee

The previously announced energy price guarantee will remain in place for a further 12 months from April 2023, but prices will increase to £3,000.00 per year for the average household.

For further information, read the Autumn Statement 2022 speech as delivered by Chancellor Jeremy Hunt.