‘There was a lot of concern about how the 2025 Budget would affect property owners,’ agrees Faye Green, Head of Residential Property with QualitySolicitors Parkinson Wright. ‘And this may have led some people to put their plans to move or invest in property on hold. Fortunately, the situation is now much clearer. However, while the changes introduced by the Chancellor of the Exchequer may be less drastic than some feared, it is still important to be aware of the new rules.’
Here Faye answers some of your questions.
I plan to move shortly. How will the 2025 Budget affect me?
If you are selling your home, or buying a new one, the 2025 Budget makes no changes likely to affect you.
The private residence relief for capital gains tax continues to apply. So, if you are selling your main home, you will not usually have to pay capital gains tax. There are some exceptions and special rules though, for example if you live abroad and are selling your UK home, or if your home has extensive grounds. So, check the position with your conveyancer.
Last year’s Budget changed the way stamp duty land tax (SDLT) applies to the purchase of property, particularly in relation to second homes or investment properties. However, the 2025 Budget made no further changes and so the existing rates still apply. This means most buyers will continue to pay SDLT on their purchases, the amount depending on the property’s value. There is no equivalent sales tax. So, unless you cannot rely on private residence relief and capital gains tax applies, it is unlikely you will have to pay tax on your sale.
However, individual circumstances vary and other factors can affect the amount of tax payable. Always discuss your situation with your professional advisors early on. You can then factor any potential liability into your plans.
I own additional properties; how will the Budget affect me?
If you own an investment property, or you rent your home out, you may find yourself paying more tax.
The Government is creating separate tax rates for property income. From April 2027, this will be 22 per cent for the basic rate, 42 per cent for the higher rate, and 47 per cent for the additional rate. This will effectively increase the rate of income tax payable on rental income by 2 per cent.
In addition, the Government is proposing to give regional mayors the power to levy a charge for overnight stays. There is no date set for this yet and the proposals will be subject to consultation. However, this could affect you if you own holiday lets or use your property as an Airbnb.
Is the Government introducing a property wealth or mansion tax?
The Budget contains no general reform of the current system of council tax. However, it does provide for the introduction of a new High Value Council Tax Surcharge (HVCTS).
This surcharge will apply to residential properties valued at more than £2 million. The exact details of the charge have yet to be determined. However, it should take effect from April 2028 and will be payable in addition to the property’s existing council tax. The rate of surcharge will depend on which band the property falls into according to its value and is likely to be between £2,500 and £7,500 each year. The surcharge will increase each year in line with the Consumer Price Index.
How will the 2025 Budget help first-time buyers?
The 2025 Budget contained no measures to directly benefit first-time buyers. However, potential reforms to the Lifetime ISA could make it easier for buyers to save for their first home. First-time buyers could also benefit indirectly from the Government’s plans to increase housing supply, for example, through the Social and Affordable Homes Programme.
Is there anything else I need to consider?
Yes. If you are a property owner, or are considering buying or selling property, make sure you get the right advice in advance, especially in regard to tax.
Buying or selling a property is an important economic transaction, with many legal issues to be considered in order to protect your interests and your enjoyment of the property in the long term. It is important to also choose a solicitor who understands your individual aims and aspirations, and knows your local market, as well as all the legal aspects of the transaction.
How we can help
For further information, please contact Faye Green or a member of the residential property team on 01905 721600 or email worcester@parkinsonwright.co.uk
This article is for general information only and does not constitute legal or professional advice. Please note that the law may have changed since this article was published.