Budget Implications on Mortgage Industry
Chancellor, Rishi Sunak has proposed the below changes in this year’s Budget in the House of Commons today.
Stamp Duty Holiday Extension
Positive news for applicants worrying about the completion of property transactions before the end of stamp duty. The current stamp duty holiday was supposed to end on the 31st of March 2021. However, the Chancellor has proposed an extension up to June 2021. To support the transition, purchases will be free from tax up to £250,000 until September 2021. From October 2021 the nil rate band for stamp duty will return to £125,000.
Generation Rent into Generation Buy
A positive initiation for applicants to purchase their dream home. The Mortgage Guarantee scheme will be introduced to support the Prime Minister’s view of Generation Rent into Generation Buy. Chancellor, Rishi stated that several mortgage lenders such as NatWest, HSBC, Lloyds, and Santander banks will be introducing 95% Mortgages from April. Also, more lenders such as Virgin Money will be following up the lead as well.
Furlough Scheme Extended
There are few mortgage lenders who accept furlough income. This extension will be positive news for those who are on furlough and wish to apply for a mortgage. The government will continue with the assistance for self-employed. The furlough job support scheme will continue until the end of September as per the Chancellor.
After July, the business will be requested for a 10% contribution which will rise to 20% in August and September. Universal credit of £20 a week is also suggested to go until September.
Personal Tax allowance to go up and be frozen
This initiative is set to help landlords. Basic Allowance will continue to go up to £12,570 as planned and will remain at this level until 2026. The higher rate threshold is to be increased to £50,270 and will remain at this level until 2026 as well.
Rise in Corporation Tax
Luckily, the rise in corporation tax will not be affecting small business property landlords. This will be beneficial and enable landlords to grow on the property ladder.
Chancellor, Rishi Sunak has said that the corporate tax rate on company profits will be increased to 25% in 2023. He also stated that even with the increase of tax, UK will remain as the lowest corporate tax rate in G7.
He added that small businesses with profits of £50,000 or less will be charged at the current rate of 19%. This suggests that around 70% of the companies will be unaffected.
There was even more positive news for those who are planning to buy a property. The Chancellor suggested a need to change the location of economic geography. He also announced that 45 new town deals are suggested including the Treasury establishing a new economic campus in Darlington.
No change for Capital Gains
Further to the office for tax simplification, there will be no changes to capital gains tax. Applicants who wish to sell their properties in the future will not be affected by this.
Introduction of new restart Grant
This is positive news for applicants planning to invest in commercial property. In order to help businesses open, a new restart grant will be provided in April. Non-Essential retail businesses will be opening first receiving a grant of £6,000 followed by hospitality and leisure business opening with a grant of £18,000. This provides a £5Bn additional grant in addition to the £20Bn grant already provided.
At WIS we look at the whole market and select the most suitable deal based on client priorities and circumstances.
As a mortgage is secured against your home or property, it could be repossessed if you do not keep up the mortgage repayments.