24th March 2024

Capital Gains Tax (CGT) on residential property sales will see a reduction in the higher rate from 28% to 24% starting April 6, 2024, benefiting owners of second homes and investment portfolios. The lower rate remains at 18%, within an individual’s basic rate band, with Private Residence Relief continuing to exempt the majority of residential property sales from CGT. The anticipated impact includes a potential increase in property listings, though it’s not expected to significantly affect property prices.

Starting April 6, 2025, Furnished Holiday Lettings (FHL) tax relief will be abolished, treating short-term and long-term rental properties similarly for tax purposes. This change aims to address concerns about the impact of short-term holiday lets on local communities and housing availability. By removing tax benefits on holiday lets, the government encourages landlords to sell or revert to long-term lettings, potentially boosting the housing market and supply.

Effective June 1, 2024, Multiple Dwellings Relief (MDR) in the Stamp Duty Land Tax (SDLT) regime will be abolished. MDR, introduced in 2011, reduced stamp duty costs for bulk purchases of residential properties. Although its removal increases transaction costs for investors, there is little expectation of a significant shift in investor appetite.

From April next year, a new tax regime for non-domiciled individuals (non-doms) reduces the tax-free period on overseas-generated income from 15 to four years. The government is also considering moving Inheritance Tax (IHT) to a residency-based system. Transitional arrangements include options to rebase capital assets, a temporary 50% exemption for the first year, and a two-year Temporary Repatriation Facility for individuals bringing foreign income and gains into the UK at a 12% tax rate.