The Spring Budget – What It Means For You
The highly-anticipated Budget announcement has finally been released, with businesses and individuals alike wondering how it will impact them in the coming months or even years. From stamp duty to the furlough scheme, the government has begun forging a path back to stabilising the economy and getting everything back on track.
With a commitment to the Covid-19 vaccination roll-out, protecting jobs and strengthening public finances, it’s safe to say the Chancellor has had a huge job on his hands. If you’re wondering how the Budget will affect you, here are just some of the key points from the announcement.
Stamp duty holiday extended
The stamp duty holiday for England and Northern Ireland was initially introduced to help buyers who might have been struggling financially due to Covid, and to ensure the property market continued to thrive. It was originally set to end on 31st March.
If you buy a property in Scotland or Wales, slightly different rules apply. Buyers in Scotland should look into Land and Buildings Transaction Tax, whilst buyers in Wales should pay attention to Land Transaction Tax.
Stamp duty is a tax paid on the purchase of property or land, and it can cost homeowners thousands. The Chancellor has extended this stamp duty holiday until 30th June 2021, which may come as a huge relief if you are currently buying a home and have been watching the deadline tick closer.
The stamp duty holiday will mean no stamp duty is paid on primary properties up to £500,000, while the nil rate band for homes up to £250,000 will last until the end of September.
5% mortgage deposits
For many people hoping to buy their first home, coming up with the deposit can be incredibly difficult. Usually a minimum of 10% is required, but the Budget announcement includes a government guarantee that requires a deposit of just 5% of the loan.
This should give first-time buyers a wider choice of mortgages, available when buying properties worth up to £600,000. It’s important to note that potential homeowners may still find it hard to get a mortgage without a regular income.
This will be available from April.
Other ways the Budget might affect you
The Budget included a lot of information, some of which is happening now and some that won’t come into effect for a few years. There are a few points which may be helpful to keep in mind.
The furlough scheme has been extended to September, which could be significant if you have been unable to work during the restrictions and various lockdowns.
What’s more, from April there will be further support available for the self-employed, with grants through the Coronavirus Self-Employed Income Support Scheme. Many self-employed were ineligible last year, but those who can show they were trading in 2019-20 through their tax returns will now be eligible for the first time.
The government has pledged not to raise income tax, national insurance or VAT.
The thresholds for income tax will rise as planned next year, but will then be frozen for 5 years. There will also be a freeze on inheritance tax thresholds until April 2026.
If you are a business owner, it’s important to be aware that corporation tax will rise in April 2023 from the current rate of 19%, to 25%. However, small businesses with annual profits of £50,000 or less will be protected from the increase.
