Autumn 2024 Budget - Changes to Stamp Duty Land Tax

The Autumn Budget of 2024 has marked a significant moment for the UK, as it is the first major fiscal announcement from a Labour government in 14 years. Delivered by our new Chancellor, Rachel Reeves, the Budget has brought some notable changes to Stamp Duty Land Tax (SDLT) that are having an immediate impact to Property purchasers across England.

The Chancellor has announced an increase to the Higher Rate of SDLT, raising it significantly from 3% to 5%, coming into effect on the 31^st of October. This increase applies to second homes, investment properties and purchases made through companies.

For example, a Company or an individual purchasing a second home for £400,000.00 will see an increase in higher rate of tax from £12,000.00 to £20,000.00 from the 31^st of October.

For Companies, a notable increase also takes effect from the 31^st of October, with a new single higher rate of 17% on SDLT for higher threshold property purchases over £500,000.00. This is a significant rise from the previous 15% and is intended to address the competitiveness of the property market and ease demand pressures on first-time buyers and primary homeowners.

It may be of some comfort to current purchasers to learn that the updated SDLT rates will apply specifically to transactions where the "effective date"—typically the completion date—falls between 31 October 2024 and 1 April 2025. Buyers with pre-existing contracts, exchanged before 31 October 2024, may find relief in knowing that the higher rates do not generally apply to their transactions.

It is worth noting that there was no mention in the Autumn Budget of the Stamp Duty Land Tax (Temporary Relief) Act 2023 which officially comes to an end on the 31^st of March 2025 and new legislation set to commence from the 1^st of April 2025. This upcoming change could mean further adjustments to SDLT relief and rate structures, marking another key date for prospective property buyers and investors. The new legislation rates, as of the 1^st of April 2025, for additional Properties are set out in the table below.

Rate changes for non-UK residents

There was also a further legislation change to SDLT during the budget, and that was to the rates for non-UK residents. This has seen a 1% increase in the surcharge, doubling the previous surcharge, on all residential transactions. This new 2% surcharge applies to purchases of both freehold and leasehold Properties, as well as increasing the SDLT payable on rents on the grant of a new lease. The surcharge also applies to certain UK resident companies that are controlled by non-UK residents.

Will the rate changes help to balance demand and affordability?

These measures highlight the Labour government’s initial steps in reshaping the housing market, signalling a move towards balancing demand and affordability while potentially shifting investment behaviours.

At Battens Solicitors, we anticipate these changes may influence a range of decisions for investors, companies, and homeowners alike. If you are considering a property purchase, especially as a non-domestic buyer or company, we recommend consulting with a member of our team to explore how these changes may affect your transaction. Feel free to reach out to our residential property team today for guidance on navigating the new SDLT changes and ensuring a smooth transition under the latest rates.