Navigating the 2024 Autumn Budget’s Impact on Property & Business Owners

Breaking down the Autumn Labour Budget for property investors and businesses

Josh Yorke

10/30/20243 min read

The UK government’s recent Autumn Budget introduces several changes that will impact property investors, business owners, and entrepreneurs, particularly through adjustments in Capital Gains Tax (CGT) rates. Here’s what these updates mean and how you can adapt to ensure you’re maximising the profitability of your investments and business assets while staying ahead.

1. Capital Gains Tax (CGT) Increase: A New Horizon for Property & Asset Owners

From October 30, 2024, the main rates of CGT will increase. The basic rate will shift from 10% to 18%, and the higher rate will jump from 20% to 24%, aligning these rates with those already applied to residential property. This increase primarily affects gains on assets other than your primary home, and it’s essential for property investors to factor these changes into their financial planning.

For instance, if you're considering selling a property or any valuable business asset soon, understanding these CGT changes is critical. Since these increased rates apply only to gains realised after the changes take effect, strategically timing your transactions could make a big difference in the tax you owe.

2. Understanding the Reliefs: Business Asset Disposal Relief (BADR) & Investors’ Relief (IR)

The government has recognised the need for some predictability, especially for business owners who have planned exits or business sales. Reliefs like BADR and IR currently reduce the CGT rate on qualifying gains, offering business owners and investors a way to access lower tax rates upon asset disposal.

Starting April 6, 2025, the rate for BADR and IR will rise to 14% and will continue increasing incrementally until it matches the main lower CGT rate of 18% by April 6, 2026. This gradual shift provides a window to plan your next moves carefully, ensuring that you make decisions with your long-term tax efficiency in mind. Business owners who are planning a sale or restructuring in the coming years should consult with tax advisors to optimise for this shift.

3. Implications for Property Investors: Calculating Profit & Long-Term Growth

If you’re actively involved in property investing, these changes impact your Return on Investment (ROI) and cash flow calculations. The increase in CGT means that flipping properties or selling assets will result in higher tax obligations. However, properties held long-term may still be beneficial, especially if you focus on generating passive income through rental yields rather than capital gains from frequent selling.

Additionally, the gradual approach taken with BADR and IR can offer an opportunity to restructure your property or business portfolios in a tax-efficient way, particularly if you’ve invested in multiple assets with varying levels of profitability. For property investors, exploring a hands-free investment approach may be advantageous, leveraging high-yield rental properties as a means to grow wealth ethically and sustainably.

4. Adapting to Maintain Profitability & Growth

While tax increases can feel like a hit to profitability, focusing on the fundamentals of property and asset investment remains crucial:

  • Maximise Rental Yields: For property investors, rental yields are a great way to generate consistent income while mitigating the impact of CGT on property sales.

  • Consider Property Refurbishment & Long-Term Holding: Upgrading properties in high-demand areas can offer a boost in rental income, helping you hold onto assets longer, reducing the need for frequent disposals.

  • Utilise Tax-Efficient Structures: Whether you’re investing as an individual or through a business entity, speak to a financial advisor about structuring your assets to maximise reliefs and minimise CGT.

5. Looking Forward: Planning for Sustainable Growth

The government has emphasised a commitment to supporting entrepreneurship and will work with venture capital firms to assess how these changes impact growth-oriented sectors. For business owners and investors, this indicates the potential for new policies or incentives that could offset some of the increased CGT burdens.

In the meantime, however, taking a proactive approach by adjusting your business or property strategy will ensure that you’re well-prepared for these changes. At Twenty-Eight 28 Property Group, our focus on ethical, hands-free property investment aligns well with the need to optimise long-term rental yields, maximise cash flow, and adapt to new tax landscapes efficiently.

With these changes on the horizon, now is the time to review your portfolio and plan for a sustainable growth strategy that takes full advantage of relief options. Whether you’re a seasoned investor or just beginning to build your portfolio, the coming years present both challenges and unique opportunities for those ready to adapt.