UK Budget 2021
UK Budget 2021: A two-minute budget round-up
Budget announced earlier this afternoon has been one of the most willingly anticipated for recent years. Unlike back in March 2020 when the Government delivered its first response to fight COVID-19, the Budget this year comes as the British economy is experiencing it biggest annual decline with debt hitting 97% of national income.
Key Budget 2021 announcements for the property sector at a glance:
- Stamp duty holiday - in an effort to boost the housing market it will be extended from March 31 to June 30 “and then, to smooth the transition back to normal, the nil rate threshold will be £250,000 until the end of September."
The stamp duty holiday is expected to help the property market by preventing the sales from falling through and raising the consumer confidence in general especially for those seeking to buy in the coming months. The question the sector is facing though is whether the announced extension will help to avoid the much feared cliff-edge scenario.
- Government-guaranteed 95 per cent mortgages – to be available from next month on the purchase of properties up to the value of £600,000.
It is believed to be good news for those who are keen to get on or move up the property ladder. However, it is still to be seen whether this measure will not drive the prices up by leaving buyers in a mortgage repayment trap and whether those earning lower salaries would be able to pass affordability requirements to get a higher loan, despite having a 5 per cent deposit.
- Business rates holiday - there will be a 100 per cent business rates holiday until the end of June; thereafter business rates will be discounted by two thirds up to a maximum of £2m for larger businesses.
- Business grants – while non-essential retail businesses will receive grants up to £6,000 per premises, the hospitality and leisure can each receive grants of up to £18,000.
- Universal Credit uplift of £20 will continue for another six months.
Other measures announced include:
- VAT for “hardest hit sectors” - the 5% reduced rate of VAT will be extended for six months to 30 September followed by interim rate of 12.5% for another six months.
- Income tax – the threshold to be frozen at £12,500 until 2026.
- Corporation tax – as expected it will rise to 25 per cent in 2023 from the current level of 19 per cent. Small profit companies of under 50k will stay at 19% rate.
- Furlough extended until the end of September; no change for employees' terms, still receiving 80 per cent of salary, but business contributions will rise from July
To find out more information about what the budget could mean to your rental investments and the West London property market get in touch with us here at Citydeal Estates.