Higher stamp duty surcharge announced in budget

Higher stamp duty for second homes, an end to non-dom status and capital gains tax increases in new government’s first budget.

An increase in the additional property stamp duty surcharge was among measures announced by the chancellor Rachel Reeves’ in her first budget on 30 October 2024. 

The supplement increased from 3% to 5%, taking effect the following day. The surcharge is paid on top of standard stamp duty rates and applies to second properties including holiday homes and buy-to-lets. 

The chancellor also confirmed that stamp duty thresholds will revert to their normal rate from April 2025. They had been temporarily raised from £125,000 to £250,000 and from £300,000 to £450,000 for first time buyers in 2022, 

The budget included an announcement on the abolition of non-dom status. According to the chancellor, the non-dom tax regime will be replaced with a new residence-based system, “to make sure that everyone who makes their home in the UK pays their taxes here”. 

The budget sees capital gains tax increase from 10% to 18% for basic rate taxpayers, and 20% to 24% for higher rate payers, bringing it in line with the rates applied to property sales. 

The increases are part of a series of tax rises worth £40 billion, aimed at fixing public services and stabilising finances. 

In addition, the budget saw inheritance tax thresholds frozen until 2030 but with pensions to be included in the tax from April 2027. 

Rates of income tax, VAT and national insurance paid by employees remain unchanged. Income tax thresholds, which are currently frozen, will rise in line with inflation after 2028. 

Employers will pay increased national insurance contributions from April of 15% on salaries above £5,000 – up from 13.8% on salaries above £9,100. 

Labour’s manifesto pledge to introduce VAT at 20% on private school fees from 1 January 2025 was also formally announced. 

Read more about the budget on the BBC website.