Chancellor Rishi Sunak set out the Spring Budget 2021 on Wednesday 3rd March, here we share the main announcements and key facts for investors that are likely to impact the property market and decisions that are made regarding investment over the coming months.
Budget announcements at a glance
There were many welcome announcements in the Spring Budget 2021 including:
- Furlough scheme extended until September 2021
- Coronavirus Self-Employed Income Support Scheme (SEISS) has been extended to the end of September 2021 and will now include newly self-employed.
- Additional funding to offer a cash incentive to companies who take on an apprentice
- Corporation tax will rise to 25%, this still remains to be the lowest tax rate in the G7. Small companies with profits under £50,000 will remain on the lower 19% corporation tax rate. This tax rise will only be applicable to 10% of businesses.
- Income tax thresholds, inheritance tax thresholds and the pensions lifetime allowance have all been frozen for 5 years.
- £5bn Restart Grants Scheme targeting the reopening of High Street and supporting the hospitality, accommodation, leisure and personal care companies. Business rate relief has also been extended for 3 months in full and for the remainder of the year business rates will be discounted by two-thirds.
- Freezing duties – wine, beer and petrol duties will remain unchanged for at least the next year.
- A mortgage guarantee from the government to help first time buyers with small deposits, together with an extension of the Stamp Duty Land Tax reduction.
- Creation of 8 new low-tax freeports: These freeports will enjoy tariff-free trade and a number of tax reliefs to lure investment. 7 seaports also won freeport status.
- In a bid to drive an investment boom the Chancellor unveiled the new UK Infrastructure Bank that will be opened in Leeds which is set to support regional economic growth and help rid the North-South divide, with £12bn of capital and £10bn of government guarantees to put to use.
Key facts for investors
At the top of the key facts for investors to take from the Spring Budget is the announcement that the temporary Stamp Duty reduction is being extended, though there are several other points that are expected to have a ripple effect:
Extension to the temporary cut in Stamp Duty Land Tax in England
SDLT has been suspended on the first £500,000 of all property purchases since July 2020. The Chancellor announced yesterday that this tax ‘holiday’ will continue as is until the end of June.
After that, the nil band rate at which buyers pay no stamp duty will reduce to the first £250,000 of a property purchase, until the end of September 2021.
The 3% levy payable by second homeowners and investors remains in place.
Capital Gains Tax annual exemptions unchanged
It had been widely predicted that the chancellor would seek to recoup lost taxes by hiking up capital gains tax.
Not only were there no changes to the Capital Gains Tax (CGT) annual exemption, but the rates of CGT have been frozen until 2026.
Build Back Better – the government’s plan for growth
Following the Spring Budget, the government released their plan titled Build Back Better which includes further details on their plans for growth moving forward.
This plan is particularly interesting to investors considering the next UK hotspots for property across the country as some of the main aims highlighted in this plan is to boost the performance and close the productivity gap within different regions of the UK.
The three core focuses are infrastructure, skills and innovation – significant government investment is being directed into the plan to ‘level up’ the country and tackle geographic disparities – the goal is for every region of the UK to have at least one globally competitive city.
Outlook for 2021
Given the announcements in the Spring Budget, the outlook for UK property investment in 2021 remains incredibly positive and if anything will be boosted further.
To discuss your plans for property investment and to learn more about how we can help you navigate the regional property markets please do get in touch.