The Chancellor has made some major changes to several land and property taxes, announcing a reduction in the rate of Capital Gains Tax on gains on the disposal of residential property, together with the abolition of both the Furnished Holidays Letting regime and Multiple Dwellings Relief for Stamp Duty Land Tax.
Capital Gains Tax (CGT) Rate for Residential Property Sales
From 6 April 2024
- A reduction is proposed in the higher rate of CGT from 28% to 24% for sales of residential property.
- It is anticipated this will stimulate the market such that the increase in transactions will more than compensate for the lowering of the tax rate.
- Owners of second homes, buy-to-let properties and other residential properties with accrued gains that do not benefit from Principal Residence Relief will be incentivised to make earlier disposals.
- The lower rate of tax remains at 18% for any gains that fall within an individual's basic rate band.
See CGT: Residential Property Gains (subscriber guide)
Abolition of Multiple Dwellings Relief (MDR)
From 1 June 2024
- The abolition of MDR from Stamp Duty Land Tax (SDLT) will take effect from 1 June 2024 (it is thought this will be by reference to the date of completion).
- Transitional rules mean that MDR can still be claimed for contracts exchanged on or before 6 March 2024, regardless of when completion takes place, subject to various exclusions.
See SDLT: Multiple Dwellings Relief (subscriber guide)
Abolition of the Furnished Holiday Lettings Tax Regime
From April 2025
- The Furnished Holiday Lettings tax regime is to be abolished.
- The government had identified the distortions created in local economies as a result of the regime which allows this form of letting to be treated as a trade for Income Tax, Capital Gains Tax and Corporation Tax. It is anticipated this change will raise £245 million a year.
- It will help local people find a home in their community by eliminating the tax advantage for landlords who let out short-term furnished holiday properties over those who let residential properties to longer-term tenants.
See Furnished Holiday Lettings (subscriber guide)
Stamp Duty Land Tax: Acquisitions by Registered Social Landlords and Public Bodies
- A technical change to the SDLT legislation to remove some out-of-date definitions will ensure public bodies will be removed from the scope of the 15% SDLT higher rate charge where the effective date of transaction (usually the date of completion) is on or after 6 March 2024.
See HMRC Stamp Duty Land Tax - acquisitions by registered social landlords and public bodies
Stamp Duty Land Tax First-time Buyers' Relief
- A change to the conditions for Stamp Duty Land Tax First-time Buyers' Relief from 6 March 2024 means certain individuals who were previously excluded from this relief will now be able to claim, bringing them into line with purchasers of residential freeholds and pre-existing leases using similar arrangements.
- Previously, individuals buying a new residential lease via a nominee or bare trust were unable to claim relief on their purchase because special rules that applied to these arrangements treated the nominee or the trustee as the purchaser and not the individual. This meant that victims of domestic abuse who wished to use such arrangements to prevent former partners from finding their new address were unable to claim relief.
See SDLT: First-time buyers (subscriber guide)
Investment Zones
- Further details of six English Investment Zones are now published: Greater Manchester, Liverpool City Region, North East of England, South Yorkshire, and West Midlands and Tees Valley.
- The duration of Investment Zones in Scotland and Wales will be extended from five to ten years.
- Details of the four Investment Zones in Scotland and Wales will be announced later this year.
- Details on the Northern Ireland Enhanced Investment Zone will also be published soon.
See Policy paper: Investment Zones update
Useful guides on this topic
Spring Budget 2024: At a glance
A summary of the key measures announced that affect individuals and businesses
Principal Residence Relief
What is Private Residence relief (PRR)? What are the qualifying conditions? Can you claim relief on two homes? How do you claim PRR? Can you claim PRR if you develop your garden?
Multiple Dwellings Relief
What is Multiple Dwellings Relief (MDR) for Stamp Duty Land Tax purposes? When does it apply and how is it claimed?
Furnished Holiday Lettings
What is Furnished Holiday Letting? How do you qualify for Furnished Holiday Letting? What are the rules for Furnished Holiday Letting?
SDLT First-time buyers
What Stamp Duty Land Tax (SDLT) relief is available to first-time buyers? What qualifying conditions must be met?
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