Call us on 01934 310653 / 01173 701730

Request a call back

Tax on Residential Property Purchase

Stamp Duty Land Tax (SDLT) in England and Northern Ireland; Land and Buildings Transaction Tax (LBTT) in Scotland; Land Transaction Tax (LTT) in Wales.

Residential property (first property only):

  • The SDLT cut announced on 23 September 2022 is a temporary measure that will remain in place until 31 March 2025.
  • First time buyers are exempt from SDLT for purchases up to £425,000 with 5% SDLT due on the portion from £425,001 to £625,000. If the property is priced over £625 you cannot claim the relief.
  • A 2% supplement applies where a property is purchased by a non-resident.
  • Higher rates for additional properties – a supplement is payable on top of the SDLT rates if buying a new residential property meaning  you’ll own more than one property.
  • From 1st June 2024 Multiple Dwellings Relief (MDR) will be abolished.
  • A flat 15% rate of SDLT applies to companies purchasing residential property with a value of over £500,000.

Personal Allowances

  • The personal allowance for those with adjusted net income over £100,000 reduces by £1 for every £2 of income.
  • Interest on savings is tax-free to a threshold if £1,000 for basic rate taxpayers and £500 for those who pay the higher rate tax.
  • Married Couple’s Allowance is given at %, claimants must be born before 6 April 1935; the full allowance is £11,080.
  • Spouses or civil partners are able to transfer £1,260 of their unused Personal Allowance to their partner  provided neither partner pays tax at the higher rate. It is not available if the couple are in receipt of Married Couple’s Allowance.

Capital Gains Tax (CGT)

  • The annual CGT exemption for 2024-25 is £3,000
  • For individuals the flat rate of CGT that applies to gains in excess of the annual exemption is 10% up to the higher rate Income Tax threshold.
  • Surcharge for residential property and carried interest of 8%
  • Chargeable gains in excess of the higher rate Income Tax threshold: 20%
  • £1,500 CGT exemption for trusts, 20% rate applies thereafter, 24% for residential property
  • The higher rate of CGT on residential property will be cut from 28% to 24% from April 2024, the lower rate will remain at 18%.
  • Lifetime Allowance on gains eligible for Business Asset Disposal Relief is £1m.

Income Tax rates

The following allowances and rates will apply in 2024-25 for the UK (excluding Scotland)

  • Income Tax is paid on the amount of taxable income remaining after allowances have been deducted.
  • From April 2024, the Dividend Allowance was reduced from £1,000 to £500.
  • From 6 April 2025, the remittance basis of taxation for non-UK domiciled individuals will be abolished and replaced with a residence-based regime.

National Insurance

Class 1 National Insurance contributions (NIC) rates are:

  • Employees NIC – 8% (from April 2024), Employers NIC – 13.8%
  • There is no NIC on first £242 per week (employee) and £175 per week (employer), then the main rate is charged up to £967 per week (employee), no limit for employer. A 2% rate applied for employees on earnings above £967 per week.
  • There is nil rate employer NIC on earnings up to £967 per week for employees aged under 21 and apprentices aged under 25.

Class 2 (self-employed) NIC rates are:

  • From 6 April 2024, self-employed individuals earning over £6,725 are no longer obligated to make payments for Class 2 NICs, but they will still be eligible for contributory benefits.
  • Those with profits under £6,725 pay Class 2 NICs voluntarily to access contributory benefits.
  • Class 3 NIC rate is a voluntary contribution at a flat rate of £17.45 per week.
  • Class 4 NIC is payable at 6% on self-employed profits from £12,570 to £50,270, over this there is a 2% rate.

Pension Allowances

Some significant changes took place from April 2023:

  • The Annual Allowance (AA) threshold increased to £60,000
  • The Money Purchase Annual Allowance (MPAA) and the minimum Tapered Annual Allowance (TAA) increased to £10,000
  • The adjusted income threshold for the TAA increased to £260,000
  • The Lifetime Allowance and charge have been abolished, replaced by the Lump Sum and Death Benefit Allowance (LSDBA) of £1,073,100 and the Lump Sum Allowance (LSA) of £268,275 from 6 April 2024.

Inheritance Tax (IHT)

  • The nil-rate IHT band is £325,000, with 40% IHT payable above
  • this threshold
  • A lower rate of IHT (36%) applies if you leave 10% of your net
  • assets to charity
  • Main residence nil-rate band of up to £175,000 where a residence is passed on death to a direct descendant
  • The proportion of the threshold ‘unused’ on the first death of husband or wife (or civil partners) is effectively transferable to the surviving partner and serves to increase his or her threshold by a
  • corresponding percentage.
  • Chargeable lifetime transfers and potentially exempt transfers attract taper relief, if made up to seven years before death, on the amount of gift over the nil-rate band.

Certain gifts are IHT-free however soon death occurs, including:

  • Gifts between UK domiciled husband and wife or between civil partners
  • Total gifts up to £3,000 in a year (can be carried forward one year)
  • Small gifts to other recipients (up to £250 each in year)
  • Gifts in consideration of marriage or civil partnership ranging from £5,000 from each parent of the couple, to £1,000 from anyone else.

State Pension entitlement

  • A flat rate, single tier State Pension of £221.20 per week is payable from 6 April 2024 (35 qualifying years of National Insurance contributions needed for full rate), available to those reaching State Pension age (SPA) on or after 6 April 2016.
  • For those who reached SPA before 6 April 2016, the basic State Pension of £169.50 applies (30 qualifying years needed for full rate), plus any additional State Pension.

7 May 2024

The views expressed in this blog do not in any way constitute advice and are specific to the date noted. As time passes the facts can change and readers should consult their adviser for up to date advice on any matters covered within the blog. Invest Southwest offers an initial review, which is free of charge, however long it takes. From this we will be able to confirm how we can help and give you an opportunity to decide if you would like us to. Thereafter, we will provide you with detailed recommendations and exact costs. Please note that we promise not to levy any kind of fee unless we can demonstrate a benefit to you.