THE AUTUMN BUDGET 2022:
GRAVESEND AND NORTH KENT LANDLORDS AND HOMEOWNERS
Jeremy Hunt, the chancellor, delivered his Autumn Budget 2022 yesterday at noon with the goal of combating inflation and maintaining low mortgage rates for homeowners. I wanted to briefly discuss what this could mean for landlords and homeowners who are considering buying and selling in Gravesend and North Kent.
Changes to Capital Gains Tax
I briefly mentioned the muted plans to raise the headline rate of capital gains tax (CGT) starting in 2020 in earlier posts regarding the real estate market in Gravesend and North Kent.
The CGT relief amount has instead been reduced in the budget from £12,300 to £6,000 for the following tax year (2023/4), and subsequently to £3,000 for 2024/5.
As a result, basic rate taxpayers will have to pay an additional £1,134 in CGT after April 2023 (or £1,764 if they are higher rate taxpayers) as well as an additional 50% on top of those amounts in the tax year 2024–2025.
Only landlords and second homeowners are required to pay capital gains tax on the difference between the purchase price and the sale price of a property. (Take note that it is not paid on gains from your primary residence). For landlords and owners of second homes in Gravesend and North Kent, this will be unwelcome news. There are things you may be doing right now to lessen your CGT liability in the future, even if you don't plan on selling your portfolio in the next five to ten years. Landlords in [name of town] can, however, apply to HMRC for a number of reliefs that can lessen their CGT burden. Send us a message if you'd want us to recommend some qualified local Gravesend and North Kent accountants.
Is it worthwhile to sell your rental property in [name of town] right now? In the UK, the average conveyancing process takes 19 weeks from the time a sale is agreed upon to the exchange of contracts. This puts the date of closing at March 30, 2022, saving you £1,764 at a time when rents have increased by 19% over the previous two years.
Stamp duty reduction to last, but only through 2025.
The reduction in stamp tax that Kwasi Kwarteng promised in his September Budget will last until 31 March 2025. According to Jeremy Hunt, the stamp duty reductions announced in Kwarteng's mini-budget will be in effect for the following two years and four months because housing activity will be slower in 2023–2024.
This implies that the price of a home before paying stamp duty will remain at £250,000 until March 2025, when it will return to the former level of £125,000. In the upcoming years, this will be fantastic news for landlords and homebuyers in Gravesend and North Kent.