The upcoming Labour Autumn Budget is expected to bring significant changes, particularly for property investors and business owners. With potential reforms that could reshape the financial landscape, here’s what might be coming—and how you could prepare.
Big Changes on the Horizon
- Business Disposal Relief
Currently, business disposal relief allows business owners to pay only 10% Capital Gains Tax (CGT) on sales up to £1 million (formerly £10 million). Labour may abolish this relief entirely, meaning all business sales would be subject to the standard CGT rate of 20%. This change could drive some business owners to consider relocating to countries with more favourable tax policies for future sales.
- Inheritance Tax Adjustments
Currently, inheritance tax is zero on the first £325,000 of assets, with a 40% tax applied on anything above this threshold. Labour may raise the 40% rate, lower the threshold, or both. For those with significant assets, it may become beneficial to transfer assets to family members long before passing, potentially minimising the tax burden.
- Increase in Capital Gains Tax Rates
At present, CGT on assets is typically 20%, but property-specific rates range from 18% for those paying lower tax rate to 24% for those paying a higher tax rate. Labour may raise these rates to align with income tax, meaning property CGT could increase to as high as 40% or 45% for the highest earners and even 20% for those currently paying lower tax rates. This would have a substantial impact on property investors planning to sell assets.
Opportunities Amid Change
- Potential Sell-Off from Older Landlords
Should these changes come into effect, older landlords may opt to retire, flooding the market with properties as they seek to avoid new, higher CGT rates. If CGT increases take effect later next year, this could create a window where properties are sold at discounted rates due to high supply. However, if changes are implemented immediately, this opportunity may be short-lived.
- Increased Commercial Property Availability
An increase in CGT on businesses may prompt some business owners to sell or relocate, leading to a potential increase in available commercial properties. This could create new investment opportunities for those interested in commercial real estate, especially at a time when other investors may be stepping back.
In Summary
The Labour Autumn Budget could introduce significant tax hikes and impact long-standing reliefs, especially for business owners and property investors. Investors should consider preparing now by reviewing portfolios, anticipating possible sales or acquisitions, and consulting with financial advisors to make the most of any available tax advantages.
Source: Simon Zutshi Watch video here… https://www.youtube.com/watch?v=2g71Pyu9GYo
The post What Could Happen in the Labour Autumn Budget: Implications for Property Investors appeared first on Fabrik Invest.
