On March 16 this year, Chancellor George Osborne shared his Budget plans for the UK. Based on weaker than expected growth (2 per cent compared with 2.4 per cent predicted in the autumn statement) the Budget heralded a continuing raft of austerity measures and cuts in public spending that have proved controversial.
One week on and here are the facts: the income tax thresholds for low and high-income earners have been raised. Personal tax allowance will increase to £11,500 by next April, and the 40p tax threshold rises to £45,000 next April.
Saving is being encouraged with a new ISA limit of £20,000 from April. There’s a new Lifetime Isa for £4,000 that can be put towards a deposit for first-time buyers (for 18 to 40-year-olds buying a home to the value of £450,000) that the state will top-up to the tune of 25 per cent of the value of the savings each year. Some have suggested this will increase the demand for property as more people are, with Government help, able to save towards a deposit for a first-time buy.
Big news for business
The Government hopes to raise £12bn from cracking down on large corporations shifting money to tax havens and earning royalty payments in the process. It’s a move that reflects the backlash against the “sweetheart tax deal” handed to Facebook and Google.
Small businesses were handed a bonus as the business rate relief threshold rose from £6,000 to £15,000, which leaves 600,000 below the threshold and paying no business rates at all.
Capital Gains Tax stands to be cut from 28 per cent to 20 per cent for higher-rate payers and from 18 per cent to 10 per cent for basic-rate payers. Unfortunately residential property is excluded from this windfall. Which just leaves the other unpopular property tax: Stamp Duty.
Commercial Stamp Duty will be zero on properties to the value of £150,000, two per cent on properties to the value of £200,000 and a top rate of five per cent on properties valued at £250,000 and more. It’s a move that the Chancellor hopes will raise £500m a year for the Treasury. Don’t forget that buy-to-let investors and landlords will no doubt be feeling the pinch of the new three per cent Stamp Duty rise on second (or more) properties when it comes into effect from April.
The Budget is a marker of the Chancellor’s fiscal mission to return the nation’s finances to surplus by 2020. With this in mind, hard public spending cuts such as the proposed reduction in Personal Independence Payments (since redacted) and a £3.5bn unspecified additional cuts are already proving highly unpopular. However, the Government’s Budget decision to tax sugary drinks at 18p per litre on 5g per 100ml and 24p per litre on drinks found with 8g per 100ml has been met with delight from children’s health campaigners who hope it will help reduce childhood obesity rates.
If you would like to benefit from the Property Divas’ experience in navigating the property market following Budget changes, then please do get in touch and we will be delighted to help.