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Property has consistently been a focal point in the government’s past budgets and the recent Spring Budget continued this trend with a diverse array of measures, including:

The abolishment of the Furnished Holiday Lettings regime from 6 April 2025.

However, draft legislation will be published in due course and include an anti-forestalling rule. This will prevent the obtaining of a tax advantage through the use of unconditional contracts to obtain capital gains relief under the current FHL rules. This rule will apply after 6 March 2024. We will not know the contents of the legislation until it is published, and while commercial sales of properties qualifying as FHL should continue to be treated as FHL (with CGT potentially at 10%), this cannot be guaranteed until we know the extent of the anti-forestalling legislation.

The elimination of the Multiple Dwelling Relief (MDR) regulations for Stamp Duty Land Tax (SDLT) in England starting 1 June 2024.

A reduction in the higher rate of capital gains tax (CGT) for residential property effective from 6 April 2024.

The introduction of a new Reserved Investor Fund.

The removal of the MDR rules is poised to significantly impact buyers of multiple dwellings, subjecting them to elevated SDLT rates. For substantial private investors, the effective SDLT rates could increase by up to 4%, with potential even greater increases for smaller-scale investors. The unfolding scenario prompts curiosity about whether Scotland and Wales, governed by distinct, devolved land transaction tax rules, will follow a comparable trajectory.

Yet, there’s a positive note in the reduction of the CGT rate for residential property, moving from 28% to 24%. This measure aims to stimulate housing supply by alleviating the tax burden on individuals when selling properties previously held for investment.

Simultaneously, the abolishment of the Furnished Holiday Lettings regime seeks to incentivise the long-term leasing of properties over shorter-term holiday rentals, contributing to an increased housing supply. The effectiveness of these changes in encouraging behavioural shifts remains uncertain.

Lastly, the announcement of a new Reserved Investor Fund regime is anticipated to encourage additional investment in the housing market through UK domiciled vehicles.

If you need any advice about your property taxes, please get in touch with a member of the CB Reid and we will be happy to help you get everything in place.