What does the Budget mean for you?

The Chancellor of the Exchequer delivered his Budget on 6 March. Here, lawyers from our Estates, Tax & Succession, Family and Residential Property & Conveyancing teams look at what it means for you.

Rebecca Swain, Head of Residential Property & Conveyancing says: “Some might feel that the Chancellor could have done more with Stamp Duty to ignite certain areas of the market.  The one change he has made is to abolish multiple dwellings relief (MDR).  In very simple terms, MDR is applied if a purchase transaction involved the acquisition of more than one dwelling.  The primary aim of the relief, when introduced, was to promote investment in residential property and the private rented sector.  However, despite being a grey area and there being many tribunal decisions in recent years, MDR had also been applied to larger properties with annexes and estates with cottages and other separate accommodation.  Instead of reforming MDR, the Chancellor chose to abolish it altogether.

“For purchasers who have exchanged on or before 6 March 2024, the relief remains available (as long as the terms of the contract are not subsequently varied).  For purchasers that have not yet exchanged but who would otherwise be eligible to claim the relief, they have the ability to do so if they substantially complete the transaction before 1 June 2024.  As the Stamp Duty savings can be significant, I am sure that there will be many buyers looking to push their transactions through before that deadline.”

Nicola Brant, Head of Estates, Tax & Succession adds: “While the Chancellor’s most recent Budget may not have included many surprises, it did, none the less, include a range of announcements which will impact on tax planning for individuals going forward. Perhaps one of the few surprises was the announcement on the reduction of the top rate of capital gains tax on residential property gains from 28% to 24% from 6 April 2024. However, as the CGT allowance reduces from £6,000 to £3,000 at the same time, this is perhaps less generous than it first appears.  It is certainly worth looking at the timing of disposals if the gains exceed £24,000.

“Less surprisingly, the Chancellor also announced that the Government will abolish the current tax regime for non-domiciled individuals and replace it with a system that is ‘simpler, fairer and more competitive’. More details are expected in due course, but, from April 2025, under the new regime, those who are tax resident in the UK for more than four years will pay tax on foreign income and capital gains. There will also be a consultation about moving to a residence-based regime for inheritance tax.

“Despite much speculation, there were no big changes to inheritance tax announced. However, in a bid to simplify the payment of inheritance tax, it was announced that from 1 April 2024, personal representatives of estates will no longer need to have sought commercial loans to pay IHT before applying for a ‘grant on credit’ from HMRC.”

Joanna Pratt, Head of Family concludes: “The Chancellor has announced additional funding for the justice system, which includes £55M for the family courts. It is intended to offer online targeted guidance and earlier legal advice, shortening waiting times and supporting families by means of Alternative Dispute Resolution, to avoid cases ending up in the courts. In light of the significant delays in the family courts, any additional resource which speeds up the court process and, even more importantly, provides funding for forums to avoid cases getting to the courts, can only help and support families going through very difficult situations.”

 If you have any questions about how the changes announced in the Budget may impact you, please get in touch.