Budget 2024 summary: Employer national insurance contributions rise and stamp duty on second homes up to 5%

by Aaron Strutt

Oct 30 2024

Chancellor Rachel Reeves started her Budget by saying it would raise taxes by £40bn, meaning this is likely to be the biggest tax-raising exercise as a share of the economy's size measured by GDP since Norman Lamont’s Budget in 1993.

The chancellor announced a £22.6bn increase in the "day-to-day health budget" £5bn in house building investment and confirmed funding has been secured to extend HS2 to London Euston station. The full 170-page budget document can be viewed by clicking here.

The rate of income tax and National Insurance (NI) paid by employees, and of VAT, remain unchanged but income tax band thresholds to rise in line with inflation after 2028. 

Property changes

• The higher rate for Additional Dwellings surcharge of Stamp Duty Land Tax will rise from 3 to 5% immediately.  This idea is to help first time buyers with a "comparative advantage over second home buyers, landlords, and businesses purchasing residential property."
• Capital Gains Tax (CGT) will increase from 10% to 18% for those paying the lower rate, and 20% to 24% for those paying the higher rate. These new rates will match the residential property rates, which will unchanged at 18 for the lower rate and 24% for the higher rate.
• A new housing package will include £500 million in new funding for the Affordable Homes Programme, increasing it to £3.1 billion, the biggest annual budget for affordable housing in over a decade. This brings total investment in housing supply to over £5 billion and supports the delivery of tens of thousands of new homes.
• Capital Gains Tax (CGT) will increase from 10% to 18% for those paying the lower rate, and 20% to 24% for those paying the higher rate. These new rates will match the residential property rates, which will be unchanged at 18 for the lower rate and 24% for the higher rate.
• Right to Buy: Reduce discounts and allow local authorities to retain full receipts from 21 November 2024.
• £3 billion of additional support for SMEs and the Build to Rent sector, in the form of housing guarantee schemes, to support the private housing market. 
• The government will provide £46 million of additional funding to support recruitment and training of 300 graduates and apprentices into local planning authorities, accelerate large sites that are stuck in the system, and boost and upskill local planning authority capacity to deliver the government’s wider reform agenda.
• The government plans to commit to improving building safety and accelerating remediation of unsafe housing in response to the Grenfell Tower fire. Investment in remediation will rise to over £1 billion in 2025-26. This includes new investment to speed up remediation of social housing. The government will set out further steps on remediation later this autumn.

Jackson -Stops chairman Nick Leeming commented: “We welcome the Chancellor’s decision to leave Capital Gains Tax (CGT) on residential property and buy-to-let properties unchanged. With supply already tight across the rental market, increasing CGT would have likely discouraged landlords from maintaining or expanding their portfolios, adding further upward pressure to rental prices and impacting affordability for renters.”

General economy

• The Chancellor has confirmed an additional £22.6 billion for day-to-day spending over two years for the Department of Health and Social care, supporting the NHS to deliver an extra 40,000 elective appointments per week, delivering on one of the Government’s first aims in office to reduce waiting times in the NHS.
• The rate of employer National Insurance will increase by 1.2 percentage points, to 15% from 6 April 2025. The Secondary Threshold – the level at which employers become liable to pay national insurance on each employee’s salary – will reduce from £9,100 per year to £5,000 per year.
• Of the £56.9 billion defence budget in 2024-25, around £25 billion will be spent on UK industry, supporting advanced manufacturing in aircraft, radars, submarines, and other key industrial capabilities.

What is going to happen to mortgage rates?

Virgin Money has announced it is increasing some of its mortgage rates, while Santander for Intermediaries is lowering rates by up to 0.36%. 

We are waiting to see how the money markets react and what happens to mortgage rates over the coming days. A Bank of England base rate cut seems less likely than it did this morning.

Call Trinity Financial on 020 7016 0790 to secure a mortgage, book a consultation, or complete our mortgage questionnaire. 

The information contained within was correct at the time of publication but is subject to change.

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