The dust is settling after the Autumn statement – what’s the outcome for homesellers?
We’ve enjoyed writing about Stamp Duty Land Tax (SDLT) over the last three or so years. The announcement by Kwasi Kwarteng to cut SDLT was highly welcomed by the property sector, as he aimed to encourage more market activity and to help first-time buyers onto the property ladder. However, Mr Scrooge, aka Jeremy Hunt, his successor, announced last month that these SDLT these changes will be reversed, writes Zah Azeem, Partner at Wimbledon based Chartered Surveyors Scrivener Tibbatts.
Kwasi Kwarteng’s retained reforms meant that no Stamp Duty is payable on the first £250,000 of any property purchase. For first-time buyers, the threshold was increased to £425,000 and applicable for houses up to the value of £625,000 (an increase from £500,000).
The new Chancellor also stuck the boot in regarding Capital Gains Tax (CGT), which has been halved – and will halve again in 2024.
Reported here, the Office for Budget Responsibility estimates that for the current tax year, CGT accounts for £15bn of overall tax receipts, but only represents 1.5 per cent of all UK tax receipts.
As Tim Walford-Fitzgerald, a Private Client partner at HW Fisher, writes: “This explains why the government had to make a significant change to CGT for it to result in a substantial and meaningful contribution to the Treasury.
“The decision to halve the £12,300 tax-free allowance for capital gains to £6,000 was particularly unwelcome news for landlords and second home owners looking to sell their property, as CGT is applied at a much higher rate for residential property sales.
“Over the next three years, expect to see an increased demand for properties at the lower end of the market. Even more so with the news that the threshold will be halved again to £3,000 in April 2024.”
As we wrote in our previous article here, even though mortgage lending has slowed – temporarily – the UK housing sector is unique, with demand chasing too little supply.
There may even be a spike in sales as individuals and families try to beat the new implementation date for the halved CGT annual exemption, set to come into effect in April 2023.
So our advice would be not to time the market, and recognise that home ownership is invariably a 25 year investment. Who knows what any of us will be doing in 2047?
If you would like to discuss something related to a property valuation, please contact me direct via email at zah@scrivenertibbatts.co.uk or call 020 8947 7040.
