On 3 March 2021, Chancellor Rishi Sunak delivered this year’s budget. A year ago, two weeks before the first Coronavirus lockdown, the Conservative Party was promising to spend enormous sums in order to ‘level up’ and reward the so called ‘red-wall’ voters. Then everything changed almost overnight, and most of the money set aside for infrastructure spending etc was diverted into saving the economy, people’s jobs, and the NHS. This year’s budget was about continuing to provide Coronavirus support and paying for the mountain of debt accrued in fighting the pandemic. However, given the circumstances the country (and the world) are in, there was some surprisingly good news from the Treasury.
Residential Property Solicitors in London can help more people buy their home
Those looking to purchase a home have been given a double-shot of good news. Not only is the Stamp Duty Land Tax (SDLT) holiday being extended to the end of June, first home buyers are also set to benefit from a government-backed low deposit mortgage scheme.
Stamp Duty Land Tax
Introduced in July 2020 to help the residential property market recover after it came to a virtual standstill in the first lockdown, the SDLT raised the tax-free threshold to £500,000. This meant most homebuyers have not had to pay SDLT when buying a new home, saving them thousands of pounds. There was concern that the property market would fall off a cliff-edge if the tax break was abruptly ended on 31 March, as many transactions would not have completed, leading to buyers pulling out of sales as they would not be able to afford to pay SDLT. Thankfully, the Chancellor announced that the tax-free threshold would remain until 30 June 2021. From 30 June to the end of September 2021, the nil rate band will be set at £250,000 – double its standard level.
Low-deposit mortgages have essentially disappeared over the last 12 months (although the number of lenders offering them has been declining since the 2008 financial crisis). This has made it almost impossible for first-time buyers, especially in London and the South-East, to save enough for a minimum 10% deposit. The government has said it is determined to turn ‘generation rent’ into ‘generation buy’.
To help all home buyers (not just those trying to get on the property ladder), the Chancellor confirmed that:
“several of the country’s largest lenders including Lloyds, Natwest, Santander, Barclays, and HSBC will be offering these 95% mortgages from next month.”
Buyers will pay just 5% deposits to buy homes worth up to £600,000. The government will offer lenders a guarantee to provide mortgages covering the remaining 95%.
Businesses can continue to benefit from the Furlough Scheme
For both employers and employees, the Budget announcement that the Government’s Job Retention Scheme is being extended until September will be welcome.
Speaking in the Commons, Mr Sunak said:
“As businesses reopen, we’ll ask them to contribute alongside the taxpayer to the cost of paying their employees. Nothing will change until July when we will ask for a small contribution of just 10% and 20% in August and September.”
Mr Sunak told the Commons: “As businesses reopen, we’ll ask them to contribute alongside the taxpayer to the cost of paying their employees. Nothing will change until July when we will ask for a small contribution of just 10% and 20% in August and September.”
Despite this positive news, there is likely to be redundancies when the Furlough Scheme does come to an end. For employees, this may mean seeking employment law advice on Settlement Agreements and whether they have a claim for unfair dismissal. Employers may need to see an employment lawyer for advice on ensuring the strict statutory redundancy process is correctly followed.
Inheritance Tax Solicitors can advise on the best estate planning strategies
For some, the budget did not bring good news. Although the Chancellor did not raise Income Tax, National Insurance, or VAT, a freeze was put on Inheritance Tax, pension ‘lifetime allowances’, and the personal tax allowance thresholds. As wages and the value of assets increase over the next few years, more people will be subject to increased taxes.
To protect your wealth, tax planning is essential. An Estate and Inheritance Tax Planning Solicitor will carefully evaluate your investments and advise on actions to take to avoid paying more tax than is necessary. Because the government’s need to repay the deficit will become more pressing over the coming years, it is vital to get your tax planning in order immediately.
To make an appointment to discuss any aspect of residential property, employment, or tax planning law please send us an email or phone 020 83490321.