Members of our Editorial Board have given their reactions to Chancellor Rachel Reeves’ Autumn Budget – and there was little joy among the respondents.
Many see elements of the October 30 statement as inhibiting business and making deals more difficult.
David Parker, head of rating at Savills, began by addressing the business rates changes. He said: “The need to assist smaller businesses is undoubtedly acute and this measure goes some way to addressing that in part, but general business rates bills are unpopularly high and have been for many years so, whilst the introduction of 40 per cent tax relief for retail, hospitality and leisure properties up to a maximum of £110,000 per business is welcome, it is a reduction from the previous 75 per cent relief, which will disappoint many.
“The annual multiplier in 1990 was 34.8p, meaning the annual bill was hypothetically 34.8 per cent of a property’s rateable value. With it now approaching 60p (or 60 per cent) of a rateable value for some properties, it’s disappointing that the funding of the relief to smaller businesses is at the direct expense of larger businesses.
“An alternative solution could have seen a uniform reduction to the annual multiplier of 20 per cent to 30 per cent across all properties, which would have immediately addressed many of the complaints regarding high business rates. This approach would have also created a property tax which is efficient and, in general, fair as it is self-levelling based on the amount of rent a business is willing to pay in order to occupy its premises.”
Dan Channer, group managing director for Haslams Estate Agents, said: The Budget is more benign than we predicted, albeit with a nasty kick for Buy-to-Let investors.
“The decision to increase the additional rate of Stamp Duty Land Tax (SDLT) from three per cent to five per cent is part of a deliberate move by the Government to shrink the private rented sector.
“Be careful what you wish for – rental supply reduced by one per cent as a proportion of total homes between 2019 and 2022 which led to rents increasing 15 per cent in two years after Covid.
“The much-trailed increase in Capital Gains Tax (CGT) on shares seems reasonable and there is no change in CGT for property sales, which we support. Many clients have paused plans before the Budget and expect activity to pick up in the next month.”
Lisa Simon, head of residential for Carter Jonas, said: “The announcement to raise the higher rate of Stamp Duty Land Tax (SDLT) on second homes (Higher Rates for Additional Dwellings tax) from three per cent to five per cent is expected to deal another blow to landlords and investors, further impacting the buy-to-let market and doing little to support the need for long-term rental properties.
“When the initial three per cent surcharge was introduced in 2016, it caught the market off guard, leading to a rush of purchases before the tax took effect. However, this latest increase, which is being implemented almost immediately, is unlikely to produce a similar surge in activity.
“Furthermore, over the past eight years, the private rented sector has faced numerous tax increases, regulatory changes, and additional burdens. This new cost is likely to discourage further investment. As more landlords exit the market and the supply of rental properties stagnates or declines, the higher tax rate will worsen the situation, potentially reducing housing options for tenants and driving up rents.”
Roger File, managing director of real estate for Blenheim Estate Homes, said: “In her first Budget statement, we were looking to the Chancellor to announce measures and policies to act as catalysts to continue to drive housing delivery.
“We are disappointed the Chancellor decided not to freeze the stamp duty thresholds; keeping them at their current levels long-term would have supported both first-time buyers and those selling their home and moving to a new property.
“Furthermore, it is frustrating that more tangible support wasn’t discussed to increase routes to home ownership and reduce affordability pressures, particularly for helping first-time buyers onto the property ladder. Such initiatives are vital to bring new home owners into the market and maintain momentum.
“Whilst the changes will not be received favourably by landlords or second home buyers, after much uncertainty in the market, at least a clearer view on some of the policies is now present.
“Like other UK housebuilders, hearing that the Government is investing more to deliver their household plans is promising but await to see the small print details and how these changes will support affordable housing and housing related infrastructure delivery.
“We were also hoping the announcement would cover further assistance or policies to allow housebuilders to get on and build the targeted number of homes so that we can meet the needs of the UK population.”
Adam Barnfield, head of business rates at Vail Williams LLP, said: “The Government’s announcement on business rates will make disappointing reading for high street businesses as it fails to live up to many of the Government’s manifesto commitments to overhaul the system and create an ‘even playing field’ with online retailers.
“Rates relief will fall to 40 per cent (from 75 per cent) up to a cap of £110,000 from April 2025, meaning that many businesses could find their rates effectively doubling next year. This is a far cry from the rates cut many were hoping for and will be challenging for retail and hospitality companies, some of which are still feeling the legacy of Covid and the cost-of-living crisis.
“Earlier this month, the British Retail Consortium published a letter signed by 71 chief executives which called for an immediate reduction to business rates relief.
“While the freeze on multipliers for small businesses is to be broadly welcomed, the change to business rates announced in the Budget is not great news for businesses with high value properties either.
“From April next, an increased multiplier will be applied to the ‘most valuable’ properties, although it is not yet currently clear what this rate will be or how many businesses this will apply to.”
Philip Waddy, chairman of WWA Studios, said: “It’s a bold Budget and one which reflects the huge majority held by Labour. The National Insurance hike, combined with the increased minimum wage will hit the hospitality, leisure and care home sectors really hard.
“Expect redundancies or worse here. Less trumpeted are the planning and housing reforms for which some detail was given but more is yet to come.
“The £3 billion support for SME builders through housing guarantee schemes is welcome, as is the £47 million to unlock sites stalled by nutrient neutrality and it’s good to see Right-to-Buy receipts now being retained by councils.
“In our region, commitment to deliver East West Rail is a bonus too. However, the jury is out pending the detail of the new Planning and Infrastructure Bill and NPPF now not due until early next year.”
Ed Meyer, head of residential sales at Savills in Cambridge, said: “Although the rate of Capital Gains Tax on residential property was unchanged, any sense of relief felt by those affected would have been relatively short lived due to the unexpected increase in the Stamp Duty Land Tax second-home surcharge.
“That will undoubtedly tighten budgets for prospective second homeowners. There’s also a risk it will further constrain the supply of private rented accommodation, which in turn will keep upward pressure on rents. New Buy-to-Let investors are likely to be pretty thin on the ground, and even existing larger, wealthier landlords could think very carefully about how much they continue to invest. This at a time when the regulatory burden on landlords also keeps rising.
“Another area much discussed pre-Budget was around ‘non-doms’ taxation. More severe proposed changes have been shelved, and, importantly, only gains arising since April 2017 on foreign assets will be subject to additional taxation.
“While that is two years earlier than proposed under the previous Government it still limits any retroactive exposure to the tax. More pertinent are the proposals to bring worldwide assets into the scope of UK Inheritance Tax where an individual has been a UK resident in 10 of the past 20 years.
“This change will cause some to question whether they remain a UK resident, or base themselves elsewhere. Instead, greater market reliance will be placed on domestic buyers and other overseas buyers. While this may dampen demand for property in prime central London, our researchers do not expect to see an increase in stock flood the market, with former ‘non-doms’ still keen to keep a base in the capital. But it is likely to mean the continuation of price sensitivity, particularly at the top end.”
William Hargreaves, who leads the rural team for Savills in Suffolk, said: “Owners of land will benefit from less agricultural and business property relief with effect from April 2026. From that date 100 per cent Inheritance Tax relief will be confined to the first £1m of such wealth, reduced to 50 per cent thereafter.
“That will reduce, though not eliminate, the tax advantages of owning such assets, the impact on farmland values being limited by the ongoing scarcity of property brought to the market.”
Nick Pain, head of Savills rural business in Oxford, said: “We need to review the finer detail of the proposals that will come out of the consultation in early 2025. However, the changes relating to Agricultural Property Relief (APR) and Business Property Relief (BPR) suggest that a fundamental reform to succession planning on farms and estates will be needed.”
Harriet Jones, partner in the corporate and commercial team for IBB Law, said: “The increased costs to employers regarding National Insurance contributions is potentially a very heavy one and many SMEs will be worried about the extra burden that places on their business and how they will deal with the additional cost.
“There were fears in advance of the Budget that the rates of CGT would be increased as high as 35-40 per cent and a lot of sale activity before October 30 was driven by those changes. In the end, the change announced by the Chancellor is not as much of a hike as many had feared, which will be a relief for some individuals.
“It is welcome that the Chancellor has retained Business Asset Disposal Relief (BADR) so that the first £1m received in a person’s lifetime for sale of business assets is taxed at a lower rate – but where BADR is available there is to be a staged increase in the rates over the next two years, so we expect to see some sellers now making plans to sell before April 6, 2025 to lock in 10 per cent on the first £1m.
A joint statement from the property team at IBB states: “The purchase of any residential property by a company worth more than the £500k will give rise to pay SDLT at a rate of 17 per cent instead of 15 per cent. Whilst the percentage points seem low, in real terms, this will give others reason to pause for thought before going ahead on a deal.
“This could, with the additional costs of just running a business on a day to day basis, prevent buyers from acting which could slow the market. Furthermore, for those lucky enough to be in the position of having more than two homes, the rates of SDLT on a second residential home have increased from three per cent to five per cent which will no doubt deter those wishing to dip their toes into property market.”
Graeme Burslem, senior associate with Mills & Reeve, said: “Immediate thoughts following the Budget are that in the short term, some investors/owners will be wondering whether they’ve locked in their gains too soon for CGT purposes in the rush to complete transactions before the Budget (as tax at the higher rate here rose ‘only’ to 24 per cent from 20 per cent, as opposed to the 30 – 40 per cent some had feared).
“Changes to agricultural and business property relief are obviously a concern that’s receiving press coverage at the moment, but we will know more once we have had a chance to pore through the detail and our estates and tax teams can then advise our clients accordingly.
“Generally, a Budget targeting business and private wealth, which to a greater or lesser extent, is broadly in line with expectations.”
Richard Venables, head of CBRE’s Oxford Office, said: “It was encouraging that former Oxford University graduate, Chancellor Rachel Reeves, didn’t forget about Oxford in her Budget address. I welcome the commitment to East West Rail which will connect Oxford to Milton Keynes in 2025, Bedford by 2030 as well as confirmation of further consultation on the link to Cambridge.
“Oxford, and Oxfordshire more broadly, are on a rapid growth trajectory with a focus on science and technology, industries that were identified in the Government’s modern Industrial Strategy. There is a significant development pipeline throughout Oxfordshire, including the ambition to see the Oxford West area regenerated.
“Our rail infrastructure provides a significant advantage to the area, and enables employees to travel from further afield from all points of the compass. We hope that the rail infrastructure improvements will also include the Cowley Branch Line, which would provide further connectivity to the area.”
Nigel Horton-Baker, chief executive of REDA, said: “As ever, the Budget is a set of give and takes with winners and losers, with the employer NI increase and its knock-on effects on business and employment being the obvious negative. That said, it is not all bad news and there is plenty in the Budget to support the creative small and micro businesses in the Reading economy that REDA has been prioritising in recent years.
“There is good news for our local arts and booming film sector centred on Shinfield with theatre tax relief maintained and a 10 year commitment to 10 years of 40 per cent relief on business rates; an extension of the Government- backed loan fund, renamed the Growth Guarantee Scheme which provides a 70 per cent guarantee on loans up to £2m, R&D funding, continued rate relief for our retail and hospitality sector, self-employed National Insurance reduced by two per cent, training for the self-employed tax deductible VAT threshold up £5,000 and R&D relief retained.
“At REDA, we are always glass half full, and we have confidence in Reading’s strong, innovative and creative economy that Reading will make the most of the opportunities the Budget has delivered and thrive in spite of the increased NI burdens.”
Leah Tompkins, senior account manager for DevComms, said: “Having reflected on the Budget announcement, I feel empowered following its delivery from the country’s first female Chancellor.
“However, I also can’t help but feel slightly underwhelmed. Planning and development appeared to be at the forefront of the new Labour Government’s priorities throughout their election campaign, so it was disappointing to see the industry mentioned fairly infrequently throughout the Budget – although I suppose I shouldn’t be shocked given the ‘tactical damage control’ from the Government this week by releasing several announcements relating to various delays to infrastructure delivery etc.
“Despite the seemingly lacklustre Budget, there are some positive takeaways for the East of England worth noting:
“On affordable housing – In a bid to unlock Cambridge’s full growth potential, an exciting £10 million investment set to drive growth in the Oxford-Cambridge corridor will empower the Cambridge Growth Company to boost housing, transport and infrastructure while advancing East West Rail.
“The investment will support the life sciences industry by unlocking private investment, helping to solidify Cambridge as a globally renowned centre of excellence and its important role within the industrial strategy.
“The Budget included promises to invest in housing, including more than £5bn to deliver housing plans. A total £500m has been added to the Affordable Homes Programme (AHP) to kickstart what is being described as the biggest increase in social and affordable housebuilding in a generation.
“Whilst this increased funding for the AHP is a welcomed addition, do we think that the 5,000 additional affordable homes this will build even scratches the surface of the need this country currently faces?
“On infrastructure development – A pledge to get Britain moving again and drive regional growth and innovation through infrastructure delivery is included within the Budget. Starting next year, East West Rail will connect Oxford, Milton Keynes, and Cambridge, creating new opportunities for housing and research hubs to support the Cambridge life sciences cluster.
“With expansion to Bedford planned by 2030, the Government is seeking to launch a consultation to drive the next stages forward.
“On life sciences – As a central part of the growth mission, the Industrial Strategy will deliver the certainty and stability businesses need to invest in the UK’s growth-driving sectors.
“Its primary objective is to drive growth. Cambridge’s life sciences cluster is being supported by taking the next steps in delivering East West Rail, to connect the laboratories, industrial parks, and housing needed.
“In summary, the Government is committed to supporting Cambridge’s growth potential. The delivery of East West Rail will be crucial for enhancing housing and bolstering the life sciences industry across the Oxford-Cambridge corridor.”
Image: Lauren Hurley / No 10 Downing Street, OGL 3 <http://www.nationalarchives.gov.uk/doc/open-government-licence/version/3>, via Wikimedia Commons
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