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Spring Budget ‘17: Tumbleweeds for the property market

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  • 08/03/2017
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Spring Budget ‘17: Tumbleweeds for the property market
Philip Hammond has delivered his first Budget as Chancellor of the Exchequer, and there was precious little in there for the housing market.

Indeed, property did not get a single mention in the Chancellor’s hour long speech.

Nonetheless, some of the Budget announcements will have a knock on effect for those working in the industry.

The state of the economy

The Chancellor was predictably upbeat about the state of the economy, highlighting that the Office for Budget Responsibility has upgraded the growth forecast for 2017 from 1.4% to 2%.

However, that forecast has been downgraded for the years to come. The OBR reckons it will sit at 1.6% next year, 1.7% in the year after that and then 1.9%.

Tax returns

For example, the Chancellor announced that for business and landlords with turnover below the VAT threshold will not have to begin filing quarterly returns until April 2019.

They had previously been due to start filing quarterly returns from next year as part of the Government’s Making Tax Digital programme.

Bad news for self-employed brokers

The Chancellor also announced changes to the tax paid by self-employed workers, with the main rate of Class 4 National Insurance contributions increasing from 9% to 10%.

Steven Cameron, pensions director at Aegon UK, commented: “The introduction of higher NI rates for the self-employed will not be welcomed by this group but were perhaps to be expected. This is because there is an increasing division between employees and the self-employed with the latter paying rates around 3% lower than those of employees.

There’s further bad news for business owners in the form of changes to the dividend allowance. Currently directors and shareholders can take out £5,000 in dividends absolutely tax free, but this is to fall to just £2,000 from April next year.

Jon Greer, from Old Mutual, said: “The dividend allowance cut was a surprise and will be really unwelcome for business owners and investors, effectively reducing the amount you can take free of tax from their business by 60%. The measure will also undoubtedly prove controversial and attract criticism from those that believe it breaches the government’s pledge not to boost personal taxes.”

And for offshore property developers

Legislation will be amended to ensure that offshore property developers who are developing land in the UK, including on pre-existing contracts, will have to pay tax on their profits. What’s more that change takes effect from today.

Business rates

All of the talk in the run up to the Budget had been around business rates, with many small firms set to pay far larger sums.

There was some small relief – those firms who are coming out of Small Business Relief will see any increase capped at an extra £50 per month next year.

Rob Lankey, chief executive of the National Association of Commercial Finance Brokers (NACFB), said: “As we’ve seen on the ground, small business appetite for funding has been steadily increasing, even in the light of Brexit-induced uncertainty – it would be severely damaging if business rates were the straw that broke the camel’s back.”

Disappointment for stamp duty campaigners

Figures from across the property market had hoped for stamp duty reform, whether that meant moving it from being paid by the buyer to the vendor or removing the higher rate charged on second homes.

However, they were disappointed, with the Chancellor resisting the pressure to amend the tax.

See the full Budget policy paper here 

 

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