Rishi Sunak has announced his first budget aimed to help to kick start the UK economy, following the uncertainty surrounding Brexit and Covid19. The budget follows on from the announcement from the Bank of England that they have cut the base rate of interest to 0.25%. Mr Sunak has listed the provision of affordable and safe housing as a priority. He stated: “Today I can make good our promise to extend the Affordable Home Programme with a new, multi-year settlement of £12bn. To support local authorities to invest in their communities, I’m cutting interest rates on lending for social housing by one percentage point. I’m confirming nearly £1.1bn of allocations from the Housing Infrastructure Fund to build nearly 70,000 new homes in high demand areas across the country.” Mr Sunak also introduced a stamp duty surcharge for foreign buyers of properties in England and Northern Ireland to be levied at 2% from April 2021
Mr Sunak continued “The Office for Budget Responsibility (OBR) have said that today’s Budget will be the largest sustained fiscal boost for 30 years. Next year, day-to-day departmental spending will grow at the fastest rate in 15 years. Over the spending review period, its set to grow at the fastest rate since 2004. An average growth rate in real terms of 2.8% – twice as fast as the economy. “That means that by the end of the Parliament, day-to-day spending on public services will be £100bn higher in cash terms than it is today.” Chancellor Rishi Sunak’s first budget contained few surprises for the legal profession. As announced previously, the government will consult later this spring on a levy to fund new action on money laundering. The Treasury’s Budget Report reveals that this will be paid by ‘firms subject to the money laundering regulations – a definition which includes thousands of legal practices. Meanwhile the government will allocate £14 million to Companies House ‘to enable it to continue with vital capital projects to help its work tackling economic crime and anti-money laundering’. The government will legislate ‘prospectively and retrospectively’ in the 2020 Finance Bill ‘to put beyond doubt that LLPs should be treated as general partnerships under income tax rules’. A Digital Identity Unit work on ways to help people to prove things about themselves without showing paper documents.
Nick Leeming, Chairman of Jackson-Stops, commented on the Budget:“Today’s Budget is in many ways somewhat of an ‘emergency budget’ to mitigate the economic impact caused by Covid-19. As a result, it is not business as normal in Number 11 and we welcome the range of measures announced to help support businesses in these more uncertain economic times and Government’s commitment to providing a £30 billion stimulus to support the economy through Coronavirus. “It is disappointing that the Government has failed to provide the housing market with a long anticipated reform to stamp duty for UK residents. This is aggravated by the overseas buyer tax, which could now see foreign purchasers pay up to 17% in stamp duty from 2021. Reducing the burden of stamp duty across the board would have provided the market with further momentum following the Boris bounce. Despite this, the higher end of the market may now see movement as foreign buyers look to secure deals ahead of this deadline.
Mark Hayward, Chief Executive, NAEA Propertymark comments on the Government’s announcement to introduce a 2% stamp duty surcharge for non-UK residents: “If introduced, this policy allows those in the UK to have a better chance at purchasing a home. However, overseas buyers tend to purchase properties in prime central London which are completely unaffordable to most homebuyers anyway. Therefore, this move will not help those that need it most. Ultimately, by energising surcharges, it is likely that purchasers will factor this additional cost into any offers they make on a property so prices may be pushed down in areas where overseas buyers are purchasing.”
Other highlights of the budget include:
- Fuel duty frozen for another year.
- £5bn for gigabit-capable broadband into the hardest to reach places of the UK.
- £7bn to support the self-employed businesses and vulnerable people.
- £6bn funding promised to the NHS.
- All those advised to self-isolate will be entitled to statutory sick pay, even if they have not presented with symptoms. Firms with fewer than 250 staff will be refunded for sick pay payments for two weeks.