What can we expect from the 2024 Autumn Budget?

A gloomy backdrop

Since Labour took office in July, the financial outlook has been far from optimistic, with frequent mentions of a ‘£22 billion black hole’ and the decision to means-test winter fuel payments for pensioners. However, despite the negative speculation derived from the gloomy rhetoric, Reeves has ruled out austerity and promised no increases to core tax rates – income tax, national insurance, or VAT.

The chancellor has also said that her Budget would have real ambition aiming to fix the foundations, deliver change, rebuild Britain and promote economic growth and investment. With this slight change of emphasis, perhaps the anticipated tax rises won’t be as significant as initially expected.

Capital gains tax

One of the most anticipated changes concerns Capital Gains Tax (CGT). There are widespread expectations that CGT rates will rise, potentially aligning with income tax rates. This could mean rates increasing to 18% for basic taxpayers and 28% for higher earners. Property investors should take note – such changes would make it crucial to reassess portfolios and explore strategies to mitigate additional costs when selling investment properties.

Housing targets and regeneration

The Labour government has ambitious housing targets, and the upcoming Budget is expected to outline initiatives that could ease planning restrictions and support urban regeneration. For property investors, particularly those involved in large-scale developments or build-to-rent schemes, these initiatives could present valuable opportunities. With the focus on meeting housing demand, especially in urban areas, investors might see increased property values in regions targeted for development, driving long-term returns.

Green policies and energy efficiency

As green policies take centre stage across political parties, we can expect new measures to promote energy-efficient upgrades to properties. Stricter Energy Performance Certificate (EPC) regulations are likely to be introduced, which may require landlords to make costly improvements. However, the government may offer grants or tax relief to support these upgrades. In the long term, properties that meet new EPC standards will likely become more attractive to tenants, boosting rental yields.

Potential reforms to property and council taxes

Property tax reforms may also feature in this Budget. One area of interest is council tax, with some speculation around a possible move to a flat-rate system based on property values, replacing the current banding system. This could result in higher council tax for more expensive properties while providing relief for lower-value homes.

Impact on the rental market

Government policies aimed at increasing affordable housing could have a significant effect on the rental market. Affordable housing initiatives may drive demand for private rentals, as well as boost opportunities for investors in affordable housing developments. For those targeting young professionals and families seeking cost-effective homes, such policies could fuel demand, particularly in regions with acute housing shortages, further enhancing property values.

Targetfollow

This year’s Autumn Budget is poised to bring substantial changes – some offering opportunities, others presenting challenges. While potential tax increases may create short-term difficulties, government initiatives could provide long-term investment opportunities for those prepared to adapt.

At Targetfollow, we will be closely monitoring these developments and their implications for the property market. A budget that supports entrepreneurial growth, boosts consumer spending, and addresses inflation could offer a positive outlook for the UK as it emerges from a mild recession.

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