Not really a Budget in the formal sense, yet Chancellor Kwasi Kwarteng’s announcements have been received with the wallop of one of the most controversial fiscal launches in modern history.
We won’t comment much on the politics involved but have set out a summary of the major points here and especially how they affect the property market and industry. We hope it’s helpful.
Feel free to reproduce the summary in your own blogs, social media and newsletters (credit ProperPR please).
The Chancellor’s ‘growth’ announcements were mostly expected and had been extensively leaked by the Treasury in recent days. The stamp duty ‘tweak’ being one of those things albeit that some believe that the small adjustment to the threshold above which stamp duty is paid for general buyers, was too small and could/should have been greater. Moreover, the penalty rate for house purchases above £925,000 in particular (10%+) and the 3% additional levies is, in our opinion, egregious and the rumour was that these higher percentages would be reduced – but sadly this was not to be (yet, anyway).
Regardless, it’s all pretty positive for the housing industry and will serve to help reinvigorate transactions and values which otherwise were set to face some headwinds as a result of the Bank of England’s base rate policy of late.
Here’s a summary of the points that the new Chancellor announced this morning. We hope that it will assist you when talking to customers, your team and indeed the press.
The highest rate of 45 pence is abolished (becomes 40p) for earners above £150,000 pa (estimated at 600,000 people) and basic rate income tax will reduce from 20p to 19p from April.
The planned hike in Corporation Tax from 19% to 24% has been scrapped.
National Insurance increase – reversed.
No standard stamp duty payable on any residential purchase up to £250,000 (was £125,000). This saves £2500.
First time buyers pay nothing on purchase prices below £425,000 (was £300,000). FTBs can claim relief on the first £425,000 even if their purchase is priced up to £625,000. This is relief worth £11,250. Effective on completions from today.
Bankers’ Bonus Cap
Low Tax Zones
40 areas will benefit from lower taxation (corporation tax, stamp duty on commercial property purchase etc) to encourage investment (watch house prices fly there now).
Beer, Spirits and Wine
The scheduled increases in duty have been reversed – and therefore celebrating the above can be done less expensively now ☺
So, a real bashing of the Treasury credit card today and to the extent that borrowing will increase by £72 billion this year alone. Do desperate times call for desperate measures? Well, we’ll all have differing opinions on the merits of Kwasi Kwarteng’s first stab at the ballot box as the country’s moneyman. But ultimately, we think that today’s giveaway will help us avoid the ‘R’ word and will certainly buoy the property industry nicely.
If you’d like any further insight or advice on this subject, talk to Proper PR.