The Intermediary – October 2025 - Flipbook - Page 80
AU T U M N B U D G E T
Rapid reaction
P rop e r t y
Predictions
Industry experts give their view on what might
be on the agenda for Labour’s next Budget
Nick Mendes
mortgage technical manager
at John Charcol
sell properties. This suggests that profits could
be significantly reduced. The CGT exemption
allowance has already been cut from £12,300
in 2022/23, to £6,000 in 2023/24, and now sits
at just £3,000. Further reductions would expose
While headline rates of Income Tax, National
more gains to taxation.
Insurance (NI) and VAT are unlikely to rise, I
Additional reforms, such as higher Council
expect the Budget to lean heavily on ‘stealth’
Tax bands or an annual property levy, would
measures. Extending the freeze on tax thresholds
reduce yields, particularly in high-value markets,
to 2030 looks highly likely, dragging more
significantly impacting profits. If Stamp Duty is
households into higher bands over time. For
scrapped, buyers might delay plans to avoid the
the housing market, reforms to property
upfront tax, while sellers could rush to complete
taxation are firmly on the table. Changes to
before demand drops under a new system.
Council Tax bands, a Stamp Duty overhaul, or
the introduction of Capital Gains Tax (CGT)
on higher-value main residences have all
been suggested. Any such moves would have a
tangible impact on buyer behaviour, particularly
in London and the South East, where already
Rob Morgan
chief investment analyst
at Charles Stanley
fragile confidence could be further undermined.
For landlords, the prospect of NI being applied
A projected £30bn shortfall in the public
to rental income would be significant. Combined
finances will likely necessitate tax increases –
with recent pressures, it could accelerate the
not only to comply with fiscal rules, but also to
trend of smaller investors exiting the market,
reassure bond markets and keep Government
reducing available rental stock. With demand
borrowing costs in check. It’s unlikely that
for rented homes still strong, this risks pushing
smaller revenue sources like CGT or Inheritance
rents higher and making affordability an even
Tax (IHT) can make a meaningful dent. CGT may
bigger issue for tenants.
already be at a tipping point where higher rates
Fergus Allen
head of bridging
discourage asset sales, which reduces overall
tax receipts. Meanwhile, proposed IHT changes
encouraging gifting – including pension
withdrawals – have already accelerated wealth
at Clifton Private Finance
transfers to the younger generations. This can
One key proposal is replacing Stamp Duty and
to be spent and pension withdrawals beyond
boost tax receipts, as gifted money is more likely
Council Tax with an annual levy on higher-value
the tax-free lump sum are taxable. Tightening
homes. This would mostly affect homeowners
gifting rules, one of the rumours doing the
in regions with high property prices, such as
rounds, could reverse this effect, potentially
London and the South East. Instead of one-
dampening economic activity and tax revenues
off charges, they could face ongoing yearly
clear. Only the major taxes can realistically
be applied to primary residences, which are
generate the required revenue: Income Tax,
currently exempt. This would make selling more
VAT, NI, and Corporation Tax. Corporation
expensive, especially in areas where house prices
Tax is likely off the table as the UK needs to
have risen significantly.
attract investment. NI was already increased
CGT changes would also impact investors and
landlords, particularly those who renovate and
78
– so the sensible thing to do would be to steer
costs. There is also speculation that CGT could
The Intermediary | October 2025
for employers, and further hikes could hurt job
creation, so that’s likely a no-go area too.
