Budget 2020: Stamp duty tweaked to help first-time buyers and tackle homelessness

Budget 2020: Stamp duty tweaked to help first-time buyers and tackle homelessness
Hannah Nemeth
Wed, 03/11/2020 – 15:49

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Overseas buyers will pay an extra 2% stamp duty when buying property in the UK, the Chancellor Rishi Sunak announced in today’s Budget. 

The surcharge on non-UK residents purchasing residential property in England and Northern Ireland will apply from 1 April 2021 and is to help first-time buyers and home movers who are resident in the UK to get on to or move up the property ladder.

The move was announced alongside a raft of housing infrastructure measures in the Budget. 

The money raised from the surcharge will be used to help address rough sleeping. The Chancellor pledged £643million for accommodation and support services to help people off the streets and start rebuilding their lives. Money raised from the surcharge will help fund these policies.

However, the Budget did not go further to reconfigure stamp duty, which many commentators had been expecting as a move to get the sluggish housing market moving. 

The stamp duty surcharge has been welcomed by property professionals, though one that probably will not deter foreign investors.

James Greenwood of Stacks Property Search says: “We’re very pleased he hasn’t messed around with stamp duty; what UK buyers and sellers need is certainty. 

“The 2% on non-resident buyers is generally digestible; it’s likely to impact London but look at the land and property taxes that non-residents pay in other countries, and UK tax is relatively benign. We don’t believe it will have a detrimental effect on the market generally.”

The stamp duty announcement comes in the wake of the Bank of England interest rate cut from 0.75% to 0.25% earlier today, which will have a more immediate impact on mortgage borrowers on standard variable rates.

This will help ease the burden on homeowners affected by the coronavirus, together with measures some banks – RBS and Lloyds, for instance – are introducing to allow a ‘mortgage holiday’ whereby people affected by the coronavirus may be able to defer mortgage and loan repayments.

Tomer Aboody, director of property lender MT Finance, explains: “On the one hand, this surprise rate cut is a real positive for borrowers on variable-rate mortgages as it will ease any financial burden caused by the coronavirus. But on the other hand, it could be seen to delay the economic plan of the government going forward. 

“For now, business will welcome this move and the decisive action which has been taken with regard to relaxing rules on the amount of capital banks have to hold against loans to UK borrowers. We are eager to see what other stimulus for the economy will be announced in the Budget later today.”

Rob Griffiths, director at the Mortgage Market Alliance, agrees: “The Bank clearly wants to stimulate the flow of lending out to consumers and businesses and for those seeking a new mortgage or looking to refinance, this is now an opportune time to do so. 

“While many lenders’ cost of funds and pricing will not be directly linked to Bank Base Rate, this is still likely to filter through to mortgage rates at some level, which means what was an already highly competitive market has just got even more so.”

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Budget 2020: Tax freeze on fuel, beer, wine, spirits and cider

Budget 2020: Tax freeze on fuel, beer, wine, spirits and cider

There was good news for motorists with the Government freezing fuel duty for the tenth year in a row

Stephen Little
Wed, 03/11/2020 – 14:53

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Fuel duty will remain frozen for the tenth year in a row, the Government has announced.

There had been reports that the Chancellor Rishi Sunak would raise the duty on petrol and diesel for the first time since 2011. The freeze will save motorists around £60 a year.

The freeze was imposed by the then-Chancellor George Osborne in 2011 and has remained at 58p per litre since then.

Sunak told the Commons: “I have heard representations that after nine years of being frozen, at a cost of £110 billion to the taxpayer, we can no longer afford to freeze fuel duty.

“I’m certainly mindful of the fiscal cost and the environmental impacts.

“But I’m taking considerable steps in this Budget to incentivise cleaner forms of transport. And many working people still rely on their cars. So, I’m pleased to announce today that, for another year, fuel duty will remain frozen.”

Freezing fuel duty costs the Treasury an estimated £800 million a year.

Earlier this week, a group of Conservative MPs wrote to the Chancellor, saying that the Government should not “balance environmentalism on the backs of working people”.

“They depend on their cars, vans and lorries to get about and run a small business. Every penny of a fuel price rise hits their financial security.”

Sunak also confirmed in the Budget that the Government will freeze duty rates on beer, spirits, wine and cider.

This will mean that a pint of beer is 1p cheaper than it would have been if it had risen with inflation.

In Britain, shoppers pay 54p per pint in tax for a pint of 5% strength lager.

Sunak said: “Today I can announce that, exceptionally, for this year, the business rates discount for pubs will not be £1,000 – it will be £5,000. And I’m also pleased to announce that the planned rise in beer duty will also be cancelled.

“And because of decisions I’ve taken elsewhere in the Budget, I am also freezing duties for cider and wine drinkers as well.

“For only the second time in almost 20 years that is every single one of our alcohol duties frozen.”

 

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Budget 2020: Junior Isa allowance more than doubles to £9,000

Budget 2020: Junior Isa allowance more than doubles to £9,000

The annual junior Isa allowance will rise to £9,000

Brean Horne
Wed, 03/11/2020 – 14:32

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The annual Junior Isa allowance will increase to £9,000, Chancellor of the Exchequer Rishi Sunak revealed in today’s Budget announcement.   

Savers will be able to put away more than double the current Junior Isa allowance of £4,368 a year.

The new allowance will kick in from 6 April 2020. 

A junior Isa is a tax-free savings account designed to encourage long-term saving for anyone under the age of 18.

Money placed in a Junior Isa can be accessed once the child turns 18.

After this point it will roll into a standard Isa subject to the adult threshold of £20,000.

The table below shows how Junior Isa rates have increased since 2016.

Year Junior Isa allowance
2020-21 £9,000
2019-10 £4,368
2018-19 £4,368
2017-18 £4,128
2016-17 £4,080

Children can save almost £30,000 a year tax-free

From the age of 16 children can also open a standard adult Isa, which have a tax-free savings allowance of £20,000. 

This in addition to the new Junior Isa savings allowance of £9,000 means that children can save up to £29,000 a year without incurring tax. 

Despite the savings boost for young savers, experts warn that it will only benefit a privileged few. 

Moira O’Neill, head of personal finance at Moneywise’s parent company interactive investor says: “The more than doubling of the Junior Isa allowance will be a boost for parents looking to invest for their children and also a great way for grandparents to use up their annual gift allowances or making a potentially exempt transfer.

“In reality, being able to invest £9,000 a year per child is pie in the sky for most families, even when resources are combined across the generations.

“For the lucky few, the Junior Isa would be worth £265,851 if £9,000 was invested from birth every year with a 5% annual return – by no means guaranteed, but a staggering amount for the lucky few who have money like this to set aside.

“With a 3% annual return, the pot at 18 would be £217,051.”

Michelle Pearce-Burke, CIO and co-founder of digital investment service Wealthify adds: “There’s a growing expectation on parents to help their kids financially when they reach adulthood.

“With the cost of higher education and property set to continue rising, parents who plan to help their children with these major life expenses will need to start thinking sooner rather than later about where the money will come from.”

Neil Lovatt, commercial director at Scottish Friendly, comments: “More than doubling the JISA allowance is not what the country or this industry needs. It’s just another whopping middle class tax-break on top of a £2bn pension giveaway.

“This increase will only serve the rich, wealthy and well advised and not the millions of parents and grandparents who want to save and invest  for their children.  

“It would have been far better to use these resources to enact some of the reforms to JISAs that we have been calling for, such as enabling grandparents to set up JISA for their grandchildren rather than waiting on the parents to make the first move.  

“This is far from a reform “for the people”, it’s just a wealthy giveaway disguised as progressive politics.”

For full coverage of the Chancellor’s announcement read our round up – Budget 2020: What the Chancellor has announced and what it means for you.

 

 

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Budget 2020: £600 billion boost to Britain’s infrastructure

Budget 2020: £600 billion boost to Britain’s infrastructure

Chancellor Rishi Sunak has announced a raft of measures to invest in Britain’s roads, railways, housing and broadband over the next five years. 

Hannah Nemeth
Wed, 03/11/2020 – 14:25

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Chancellor Rishi Sunak has announced a raft of measures to invest in Britain’s roads, railways, housing and broadband over the next five years. 

Mr Sunak announced an investment of £27 billion in Britain’s roads, which includes the second round of Major Road Network and Large Local Major schemes proceeding to the next stage of development, plus a £2.5 billion fund to repair Britain’s potholes, aiming to fill 50 million potholes and resurfacing roads over the next five years.

The government is investing £4.2 billion in the transport networks of eight city regions across England from 2022-23. Funding will be delivered through five-year, consolidated transport settlements.

In the wake of the Grenfell Tower tragedy, he has included a £1 billion safety fund to remove unsafe cladding from high-rise buildings as part of the Government’s Building Safety Fund.

He has also pledged £5 billion for state-of-the-art broadband in the most remote areas.

Other measures include £12 billion for building affordable housing. Its Affordable Housing Programme will have £9.5 billion more to spend on affordable homes in England.

Mr Sunak says that there will be almost £1.1 billion allocated from the Housing Infrastructure Fund to build nearly 70,000 new homes in high demand areas across the UK.

A new £400 million Brownfield Housing Fund aims to create more homes on brownfield land in areas such as the West Midlands.

Some £650 million has been put aside to help Britain’s rough sleepers back into accommodation. There will be a stamp duty surcharge of 2% for non-UK residents from April 2021 to help pay for it. 

Following the winter floods, the Government will invest £5.2 billion in a six-year flood defence programme.

Hew Edgar, head of RICS UK Government Relations & City Strategy, comments: “There is lots in today’s budget to applaud and the Chancellor has clearly been listening to RICS – particularly with the long term review of business rates which needs to happen quickly for firms to plan ahead, and the £1billion cladding remediation fund which will give more leaseholders and homeowners certainty and ensure where they live is safe.  

“Levelling-up the country isn’t about what is said at the dispatch box, but the £600 billion to be spent on new infrastructure stands to transform all parts of this country – however we must learn the lessons of projects like Heathrow and Cross Rail to ensure this is delivered effectively for taxpayers. Our professionals can help ensure projects that make a real difference to peoples’ lives are delivered on time and on budget.

“Delivering green, new housing required an ambitious approach to VAT – not superficial tweaks to stamp duty –  so we’re disappointed the Chancellor didn’t support the property industry to retrofit thousands of buildings, turning them into places people would have loved to call home.”

 

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