The Labour government’s decision to charge private schools VAT from January rather than September next year has created a mood of wariness that will hit the prime property markets, according to estate agency group Knight Frank.
It’s thought this change has raised concerns that there could be harsh changes to capital gains tax, inheritance tax and pension tax relief in the Autumn Budget on 30 October.
Tom Bill, head of UK residential research at Knight Frank, said: “The measure by itself won’t have a dramatic impact in prime property markets, but together with other potential tax rises, it may keep demand in check.
“Given the government’s pledge not to raise income tax, VAT or National Insurance, speculation has centred on among others.”
Meanwhile changes could be made to rules on non doms, and there are 74,000 individuals living in the UK who do not pay tax on their non-UK income.
Meanwhile close attention will be paid to how pre-existing overseas trusts are treated for inheritance tax purposes.
Prime central London property prices fell by -2.4% annually in July, though Knight Frank expected price reductions to narrow to -1% by December.
The impacts would be less felt in prime outer London, where prices should still rise by 2% this year.
Prime country prices are apparently still falling from the ‘race for space’ highs of the pandemic. The annual decline recorded in June was -3%, while it’s expected that prices will fall by -2% in 2024.
