What does the new budget mean for you? Kenilworth expert explains
By Alex Sharp
31st Oct 2024 3:17 pm | Local Features
Alex Sharp of GAM Home Loan Specialists writes about the impact of this week's budget and what it means for people in Kenilworth.
The UK Budget, announced on October 30 by Chancellor of the Exchequer Rachel Reeves, introduced significant changes aimed at stabilizing the economy, bolstering public services, and supporting low- and middle-income households amid ongoing economic challenges.
This budget has already been praised and criticised from different commentators.
The 2024 UK Budget impacts housing affordability and financial planning through raised stamp duty on additional properties, higher capital gains tax rates, and the continuation of the mortgage guarantee scheme.
Increased funding for affordable housing and higher wages also aim to ease living costs and support economic stability.
But here are a few key points focussing on mortgages, housing and financial advice.
Stamp Duty
The budget speech did not directly address First Time Buyer and Home Mover stamp duty but there was an implication.
The budget kept the upcoming changes for the 1 April 2025.
First time buyers currently have a threshold of £425,000 where they do not pay stamp duty, this is changing to £300,000.
Home movers currently have a threshold of £250,000 which will change to £125,000.
Meaning you are likely to need to budget for a higher stamp duty tax.
The speech did discuss the increase in stamp duty on additional properties.
The surcharge was an additional three per cent it is now five per cent.
Therefore, if you were buying an additional property to rent out for £300,000 you would have paid £11,500 in stamp duty. And today you pay £17,500!
Capital Gains Tax
The government's decision to immediately raise Capital Gains Tax to 18 per cent for the basic rate and 24 per cent for the higher rate will have significant repercussions for a wide range of investors, primarily those holding shares.
The current annual capital gains allowance was also left unchanged at £3,000 per person.
These changes were not as high as some people predicted but it is likely that freezing the £3,000 threshold will create income for the government through fiscal drag.
Inheritance Tax
Rachel Reeves announced many changes to Inheritance Tax that will likely have many people feeling anxious about their beneficiaries' futures.
There was talk about reducing the thresholds, again the thresholds were frozen and fiscal drag will create income for the government.
But the key change, which I believe to be very significant, was to inherited pensions being brought into IHT from April 2027.
Pensions were considered outside your estate for inheritance tax purposes, but bringing them into your estate will push many people over the IHT threshold.
If you think this could affect you then please speak to a financial adviser.
Housing
The government announced that £5 billion will be spent on housing investment in 2025-2026.
Including, and hopefully specifically, to increase the supply of affordable housing.
The budget report states that the government plans to make the mortgage guarantee scheme, which was due to end, "permanently available" but will release more details early next year.
The chancellor also announced more than £1 billion investment to remove dangerous cladding from homes next year.
Wages and Pensions
From April 1 the National Living Wage will increase by 6.7 per cent to £12.21 per hour.
This will benefit 3,000,000 people.
There is also an increase for workers aged 18-21 to £10 per hour.
The Pension Triple Lock Guarantee will also increase National State Pension to £230.25 per week.
Your home may be repossessed if you do not keep up repayments on your mortgage.
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