Taxing Times For UK Economy | Autumn budget 2022

On 17 November 2022, the Chancellor of the Exchequer Jeremy Hunt announced a number of property related matters in the Autumn Budget as summarised below.

Stamp Duty Land Tax

In Kwasi Kwarteng’s mini budget in September, the Stamp Duty threshold of £125,000 was increased to £250,000 resulting in a Stamp Duty Land Tax saving of £2,500 for buyers. For first time buyers SDLT, the zero-rated threshold was increased to £425,000 from £300,000 where the purchase price is below £625,000.

The Chancellor of the Exchequer has confirmed that the threshold will revert to £125,000 on 31 March 2025. The zero-rated threshold for first time buyers will fall back to £300,000 at the same time.

Energy Bills

The energy price guarantee that was introduced in October 2022 will remain in place but at a reduced level from April 2023 and will end six months earlier. This follows the cost of energy soaring by up to 80% and the government providing households discounts off energy bills. The price cap was previously the equivalent of £2,500, however from April 2023 this is set to rise back up to £3,000 for the following 12 months.

Council Tax

High level changes to Council Tax will now allow local authorities in England to raise Council Tax by 5% without the need for a referendum. This removes the right for a public vote where Councils propose increases by more than 2%.

Business Rates

The Chancellor has unveiled £13.6 billion to support companies dealing with higher Business Rates bills, which include the freezing of the Business Rates multiplier for another year.

The Treasury has also confirmed that a total increase in Business Rates bills will be less than 1% compared to a projected 20% increase without Government intervention.

Other measures also included an increased rates relief for retail, hospitality and leisure businesses worth almost £2.1 Billion to businesses in these sectors.

Capital Gains Tax and Dividend Tax – What this will mean for landowners

Capital Gains allowance reduced to £6,000 as of April 2023

Capital Gains Tax (CGT) is a vital consideration for landowners and will ultimately impact development land disposal and therefore housing supply.

CGT in a nutshell…

• CGT is a tax on the profit made on the disposal of assets, the gain realised in excess of the personal allowance is taxed.
• The current CGT charge is either at 10% or 20%, depending on the taxpayer band level.
• Autumn Budget 2022 has stated that CGT allowance will be reduced from £12,000 to £6,000 as of April 2023, and reduced further for the following year to £3,000.

The changes to CGT will be a sigh of relief for landowners especially, some of whom were anticipating a rise in the CGT rate to reflect income tax rates. Such a rise would create uncertainty with many land sales looking to exchange before April 2023. Whilst the allowance has been reduced many will take the view that the implications could have been far worse, potentially leading to a rush to ensure assets are sold before the April 2023 deadline.

Andrew Wright, Head of Planning & Development at Kirkby Diamond comments: “In my opinion the Chancellors statement is well balanced and is unlikely to have any negative impacts on housebuilding and land sales in the short term. The 31st March 2025 time limit on the purchase price threshold for First Time Buyers Relief, may be viewed positively and is likely to encourage developers to accelerate the delivery of housing where possible.”

Adam Smylie Head of Valuation comments: “There was a large amount of speculation prior to the Autumn Budget that there would be significant tax increases for the average Briton. Middle earners are facing the prospect of a disproportionate decline in living standards due to rising energy bills and having to pay higher taxes (including Council Tax).

"It is unsurprising that the Stamp Duty threshold will be reduced in 2025. The increase was introduced to help boost house sales and whilst many properties may be brought to the market in the short term, there is still a noticeable lack of transactions taking place. This has been worsened by the high cost of borrowing and economic uncertainty that has been created in the last three months.

"From a property perspective, keeping the Business Rates multiplier the same may benefit many businesses as Business Rates, alongside energy costs, continue to be many businesses highest operational costs excluding rent and wages. Those businesses in the hospitality sector are some of the worst hit, seeing a decline in footfall coupled with rising running costs. The rates relief scheme will continue to help these businesses.

"Industrial users should be mindful of their Business Rates as at the next revaluation these occupiers are likely see a significant increase in Business Rates, due to significant rental growth in the last five years. Conversely, occupiers of retail properties may see their Business Rates fall, which would be of great benefit to the ‘high street’.

As we are now reported to be in a recession due to economic contraction (as opposed to growth), we await the Spring Statement to find out if the measures introduced by the Chancellor of the Exchequer have boosted the economy, or if this is the start of a prolonged period of economic downturn”.

However, it’s not all doom and gloom. Kirkby Diamond's team of property professionals remain well placed to seek out opportunities for clients and can help you with your property matters to stop any further headaches your business may have to face in the coming months.

For more information on the Budget or property related matters and how Kirkby Diamond can help your business please contact us - info@kirkbydiamond.co.uk

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