This week’s UK Autumn Budget announcements include big changes that will impact homeowners, property investors, and people looking to buy homes. Here is a breakdown of the main updates and how they might affect you.
Mortgage Guarantee Scheme Extension: Good News for First-Time Buyers
The Mortgage Guarantee Scheme, which was due to end, might be extended past 2025. This program helps first-time buyers with small deposits. You only need a 5% deposit to get a mortgage under this scheme, making it easier for many people to buy a home.
Advice for First-Time Buyers and Homeowners:
If you are a first-time buyer, this could help make homeownership more affordable. Keep an eye out for news about the extension so you can plan your purchase.
For existing homeowners, this scheme could drive more demand in the housing market, which may increase house prices in some areas.
Stamp Duty Threshold Changes: What You Need to Know
By April 2025, the stamp duty exemption limit for first-time buyers will drop from £425,000 to £300,000. This means buying a home will cost more for many new homeowners, especially in expensive areas.
How it affects you:
If you are thinking about buying your first home, it may save you money to buy before the new stamp duty limit comes in. Acting now could save you thousands of pounds.
For homeowners looking to sell, be aware that buyers might have less money to spend. You may need to adjust your pricing, especially if your home’s value is near the new threshold.
Tip for homeowners: Speak to a mortgage advisor. They can help you understand the impact of these changes and advise on options like remortgaging or adjusting your financial plans.
Capital Gains Tax (CGT) Changes: Higher Costs for Property Investors
The government plans to increase Capital Gains Tax rates on property sales. The lower rate will go up from 10% to 18%, and the higher rate will rise from 20% to 24%. This change mainly affects people who own rental properties or second homes.
Who will be most affected?
Property investors: If you rent out properties or own a second home, your tax bill will increase. This might make owning rental properties less profitable.
People selling properties: If you are thinking of selling an investment property, doing so before these tax increases could save you money.
Advice for investors: Talk to a financial advisor or taxation specialist to review your investment strategy. You may want to look at other ways to invest, like pensions or tax-efficient savings accounts, to reduce the impact of higher taxes.
Income Tax Thresholds Frozen: What It Means for Your Wallet
The income tax thresholds will stay the same until 2028. As wages increase, more people will end up paying higher rates of tax. This effect, known as “fiscal drag,” could mean bigger tax bills for many.
Impact on homeowners:
Higher tax bills could make it harder to cover mortgage payments. This is especially true if you have a variable-rate mortgage and interest rates keep going up.
You may need to budget carefully and consider how rising taxes could affect your ability to pay your mortgage and other expenses.
What you can do:
If your income is likely to increase, prepare for higher tax payments. Consider ways to reduce your taxable income, such as putting more money into a pension.
Think about switching to a fixed-rate mortgage if you’re worried about costs going up. This could give you some stability and help you plan your finances.
Other Important Updates at a Glance
National Living Wage increase: The hourly rate will go up to £12.21. This is good for workers but could mean higher costs for businesses.
Inheritance Tax and Pensions: Starting in April 2027, inherited pensions will be subject to inheritance tax. If you are planning your estate, speak to an estate planner to understand your options.
Right to Buy discounts reduced: Discounts will be cut back, and there will be more rules to protect social housing.
Planning for the Future
The Autumn Budget brings many changes that could affect your property plans and tax bills. Whether you are buying your first home or thinking about investing in property, planning ahead is essential.
Next Steps:
Get expert advice: Speak with a mortgage or financial advisor to understand how these updates affect you. Skyline Mortgage Consultants can give you personalised mortgage advice to help you navigate these changes.
Stay informed: Keep up with the latest news in the housing market and government announcements. This will help you make smart decisions about buying, selling, or investing in property.
Book a Free online Consultation
Skyline Mortgage Consultants offer free mortgage advice. You can easily book an online meeting with Tony to discuss your options at a time that works for you.
Your home (or property) may be repossessed if you do not keep up repayments on your mortgage or any other debts secured on it. A fee may be charged for mortgage advice. The amount will depend on your circumstances.
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