Sunak's First Budget: What Will It Mean for the UK Economy?
The 11th of March 2020, the upcoming UK budget date, will see the first budget announcement made since Boris Johnson became Prime Minister. Newly appointed Chancellor, Rishi Sunak, will also deliver the next UK budget for the first time in his career. In this article, we discuss what’s expected from the budget announcement and what this could mean for the UK property market.
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When is the Next Budget and When Does the Budget Come Into Effect?
The next budget in the UK will be on 11th March. We can expect the 2020 budget to come into effect by Autumn this year. In the past, budgets have been delivered in the March or April of each year. However, in 2016’s Autumn Statement, it was announced that after the 2017 Spring Budget, Budgets would instead be delivered in Autumn.
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How Will the Next UK Budget Affect the Property Market?
In past UK budget announcements, new builds have been a significant theme when discussing the housing market. In the 2020 budget proposal, plans to cut the costs within the First Homes scheme are expected. This could mean that the cost of new-builds will be cut by as much as £94,000. This comes in line with the conservative’s plans to build a million new homes by 2025.
Another property change expected for the budget announcement is the introduction of a Mansion Tax, which is a tax paid on homes worth over £1 million. It’s currently not known whether this tax would apply to landlords or if the Mansion Tax would only affect those who own the property as their home.
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What Will The 2020 Budget Announcement Mean For Investments?
Much like speculation over how property prices after Brexit could change, there are certain ways that the new UK budget could impact property investments. One thing that’s expected within the budget announcement is a change in Stamp Duty taxes. The current Stamp Duty tax laws state that anyone buying a property worth over £125,000 will need to pay Stamp Duty. There is speculation that within the UK budget 2020, the threshold for Stamp Duty tax will increase to 500,000. For properties that are a first home and cost less than £500,000, only 5% Stamp Duty tax is expected on the portion from £300,000 to £500,000. If the threshold does increase to £500,000, landlords will benefit from tax savings of £9,500 on a £240,000 property.
Another budget tax change could include the surcharge rate that’s paid by investors. At the moment, landlords will pay a 3% surcharge on all investment properties. Landlords will pay 3% on the amount of the property up to £125,000, and then pay 5% on the remainder. In the new UK budget, landlords may only need to pay the 3% surcharge on the entire property price.
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What Else Will the New UK Budget Involve?
Some of the other themes expected to be brought up in the new UK budget for 2020 focus on employment, social care, and economic growth. This includes plans to save all workers that earn £12,600 around £100 per year. The budget may also include mention of an improvement to workers rights in regards to protecting those on maternity leave or zero-hour contracts.
An extra £1 billion worth of funding could be planned within the 2020 budget proposal to go towards social care in the UK. There could also be some hidden budget tax rises planned to help pay for social care.
Economic growth in the form of regeneration and infrastructure is also likely to be involved in the 2020 budget. Boris Johnson has hinted that plans are in place to improve transport and infrastructure in the UK, which will likely involve further development of the HS2 transport scheme. As regeneration is always good news for property investment, this would help to boost UK investment prospects further over the coming years.