Posted on: 05-03-2021 in Expats
Almost a year ago, Rishi Sunak revealed the details of a budget which allocated £30bn to support the Covid-19 related government services. Today, the Chancellor of the Exchequer delivered a speech in the House of Commons to announce the 2021 UK budget to the public.
After a year in which 120,000 people lost their lives due to Covid-19 and almost £300bn have been spent to support the UK economy, policymakers requested the new Budget to set out further government support which would help tackle the financial crisis and its consequences across the country.
Economists suggest that the 2021 Budget must help reboot the UK economy from the worst recession recorded in the last three centuries. The Chancellor presented a Budget that extends the existing furlough schemes, freezes taxes and gives some incentives to businesses that would like to invest in the UK.
Expats looking to buy or invest in UK property will be pleased to hear Sunak’s announcement that the Stamp Duty holiday will be extended.
The Chancellor announced the expected extension of the Stamp Duty holiday until September 30th.
More specific, properties worth up to £500,000 will be exempted from stamp duty from the end of March until the end of June. After that, there will still be no duty on homes worth up to £250,000 for another three months.
As he said, the tax relief has helped the property market significantly to cope with the coronavirus pandemic financial consequences.
Rishi Sunak also announced the creation of a new Mortgage Guarantee Scheme. The scheme aims to encourage lenders to lend mortgages up to 95% and help people who can’t afford a deposit to enter the property market. The Chancellor noted that thanks to the new scheme, the “Generation Rent” will turn into “Generation Buy.”
The furlough scheme (Coronavirus Job Retention Scheme) has been extended from the end of July to the end of September.
Furloughed employees will continue to receive 80% of their salaries. However, employers will be asked to contribute 10% from July and 20% from August.
The Self- Employment Income Support Scheme has also been extended until the end of September. Grants 4 & 5 will be made available to those who filed their tax returns by midnight on March 2nd.
According to Rishi Sunak’s speech, thresholds for inheritance tax, pensions lifetime allowance and capital gains tax thresholds would remain frozen.
Personal income tax thresholds will remain frozen from 2022 until 2026 – at £12,570 for the basic rate and £50,270 for the higher rate.
Corporate tax is set to increase to 25% in April 2023. However, the Chancellor noted that companies with profits of less than £50,000 will still pay 19%.
Implementation of a “super deduction” scheme will allow firms to invest in equipment to receive tax breaks from the government.
Extension of the temporary reduced VAT rate for hospitality and tourism will also be extended to the end of September.
Alcohol and fuel duties remain on hold.
The Budget also confirmed that the Department of Work and Pensions will backdate £3bn in State Pension underpayments to women over the next few years.
The Office for Budget Responsibility (OBR) has cut the growth forecast for this year to 4%. However, according to the OBR’s survey, the UK economy is expected to fully recover by summer 2022, at least six months earlier than forecast.
Today’s Budget will no doubt affect both expats and those currently living in the UK. If you would like to discuss how today’s changes might impact your financial goals, speak with one of our experts.
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