Here are some of the implications if you’re thinking of moving…

According to the latest Lloyds Bank Home Mover Review, the number of people moving home increased by 10% in the first half of 2024. There’s been a lot going on since then, with more changes to come.

Interest rates

Inflation held at 2.2% in both July and August, and projections suggest it won’t dip below the 2% target until at least 2026. Inflation is now far below the peak of 11.1% in October 2022.

Because of this the Bank of England cut rates by 25 basis points in August, the first reduction in over four years. They held the rate in September.

The current Bank rate is therefore 5%, after many months at 5.25% – which had been the highest level for 16 years. Interest rates peaked at 17% in November 1979.

It’s impossible to predict what will happen to interest rates, but several mortgage lenders have already lowered their rates.

If inflation continues to stay down, industry insiders are optimistic that average mortgage rates could fall below 5% in 2024, which will help to kickstart the housing market.

Change of Parliament

With the Labour party winning the UK General Election in July, anything is possible in the 30 October budget.

For example, their Manifesto said first-time buyers would see their Stamp Duty exemption reduced from £425,000 to £300,000 from April 2025.

They promised a Freedom to Buy scheme to help people get onto the property ladder.

Also, Stamp Duty for non-UK residents buying in England or Northern Ireland will go up another 1% – it’s already 2% higher than the rate paid by UK residents.

Other reported aims:

It will be interesting to see what’s announced when the budget comes.

CGT and second homes

It was quoted that Capital Gains Tax (CGT) might be charged on a homeowner’s main residence, but Labour have promised that’s not in the plans.

It’s different if you own a buy-to-let property.

Currently, you get an annual allowance of £3,000 – reduced from £12,300 since 2020 – so CGT becomes liable fairly quickly. You then pay the tax on any profits above that amount in that tax year. The allowance resets annually on 6 April.

Current rates (basic rate taxpayer)…

Current rates (higher rate taxpayer)…

There are different allowances for trustees and those with non-domiciled status.

The prediction is that CGT will eventually be brought into line with income tax rates. For 2024/25 these rates are:

Tax is charged on ‘taxable income’ at the basic 20% rate up to the basic rate limit, set at £37,700.

Another prediction is that it’s unlikely any announcement made in October will take effect as soon as April, as that is likely to cause a spike in sales of second homes and BTL properties.

CGT and Trusts

For tax advice, you need to talk to a tax specialist. If you have a Will Trust that might be affected by an increase in CGT, talk to us.