Stamp duty holiday
Estate agents are gearing up for a second housing mini-boom after the Chancellor extended the stamp duty holiday until the end of June.
It means an extra 300,000 home buyers could benefit from the break.
House hunters swarmed property websites within minutes of the announcement, suggesting the market may once again go into overdrive.
The extension was widely anticipated, but Rishi Sunak went further than expected by announcing an additional tapering-off period.
Property experts said the news would be a ‘huge relief’ to buyers stuck in transaction bottlenecks and would save up to 100,000 sales from collapse. It prompted the Office for Budget Responsibility to predict house prices would grow by 5 per cent this year, a startling turnaround from its November forecast of a 4 per cent fall.
The holiday means no tax is paid on properties worth up to £500,000, offering savings of up to £15,000. It was introduced in July and had been due to end on March 31, but will now be extended in England and Northern Ireland until June 30. The threshold will then be reduced to £250,000 until September 30, before returning to its normal level of £125,000.
Luke and Lauren Elliott, from Solihull, could save thousands in stamp duty holiday (pictured with their children Jack, four, and Alice, two)
Property website Rightmove said 45 per cent of buyers would pay no stamp duty during the ‘tapering off’ period.
Homeowners Lauren and Luke Elliott said the announcement should save them thousands of pounds when they move house later this year. They believe it also helped sell their current home because they received an offer on it shortly after Mr Sunak’s statement yesterday.
Mr and Mrs Elliott, from Solihull, who run their own music school called Music Monsters, have sold their property for £285,000 and are looking to buy a new home for around £350,000. Mrs Elliott, 30, said: ‘It’s absolutely brilliant news for us and hopefully means we’ll be able to save some money on our next property, too. We definitely should be able to move in time for the next deadline now.’
Rightmove reported an 85 per cent spike in users of its mortgage calculator and a 16 per cent jump in overall traffic within half an hour of the Chancellor’s speech.
The initial tax break sparked a frenzy of activity and pushed prices to record highs. But it also caused massive backlogs and prompted fears that sales worth up to £1.5 billion could collapse if they missed the March deadline.
Tim Bannister, Rightmove’s property expert, said one in five deals agreed in July last year still hadn’t been completed. He added: ‘This three-month extension will come as a huge relief for those people who have been going through the sales process since last year and were always expecting to make use of the stamp duty savings.’
Mr Sunak also announced that the Treasury would back lenders offering loans to buyers with a deposit of just 5 per cent.
But critics said the policy did nothing to make homes more affordable and – coupled with the stamp duty holiday extension – would push prices further out of reach for many. Polly Neate, chief executive at housing charity Shelter, said two thirds of private renters had ‘no savings at all’ and still wouldn’t be able to ‘scrape together’ a 5 per cent deposit.
VAT cut extended for hospitality
Drinkers, diners and tourists will receive discounts for another year after the Chancellor extended a cut to VAT until April 2022.
Rishi Sunak said hospitality had been ‘one of the hardest-hit sectors’ and 150,000 businesses employing more than 2.4 million people ‘needed our support’.
He said the cut from 20 to 5 per cent would be extended until September ‘to protect jobs’, before increasing to an interim rate of 12.5 per cent between October and March.
Taxes on alcoholic drinks will also be frozen for only the third time in two decades, reflecting that ‘this is a tough time for hospitality’. The duty cut equates to a 2p saving on a pint of beer, 8p on a bottle of wine and 30p on a 75cl bottle of Scotch whisky.
The VAT cut will cost the Treasury £5 billion, while the one-year freeze of duties on spirits, wine, cider and beer will cost £315 million. It is hoped the cuts will encourage customers out of their homes to spend, once firms are allowed to reopen from April 12.
Surrey publican Garry Tallent (pictured alongside Sandy Masson) said the relief measures had given his business ‘a fighting chance’ of survival
Surrey publican Garry Tallent said the relief measures had given his business ‘a fighting chance’ of survival.
Mr Tallent, 57, who runs The Red Lion in Chobham with his partner Sandy Masson, said he had hoped alcohol duty would be cut, but he was pleased with the support offered, and the extension to the furlough scheme will help him retain his 16 staff members. He added: ‘The VAT cuts have given us a fighting chance of survival.
‘We would have liked them to be extended for longer but it feels like the Government have given us a workable solution to the crisis. It would also have been nice to see alcohol duties brought down for pubs, but overall I was more pleased than I was disappointed.’ Mr Tallent took over The Red Lion in August 2019 and the business has lost around £140,000 during the pandemic.
He said: ‘The support offered doesn’t even touch the sides of what we have lost. But pubs will always be a volatile industry, even in the best of times. We’re very resilient and we’re used to thinking on our feet.’
Economists have predicted a ‘roaring 20s’ as households unleash £180 billion of savings built up during the pandemic.
But businesses are worried that ongoing worries about the virus will mean many will be nervous to head out, dampening the recovery.
Emma McClarkin, chief executive of the British Beer and Pub Association, said: ‘This was a good Budget for pubs and brewers in the short term.’
But pubs that do not serve food hit back at Mr Sunak’s measures, as they do not benefit from the VAT cut.
Dawn Hopkins, of the Campaign for Pubs, said: ‘Rishi Sunak either doesn’t understand or doesn’t care about the classic community local pub, as he has yet again discriminated against them with a food-only VAT cut that funnels millions to the likes of KFC.’
Furlough until October
The furlough scheme will be extended until October – long after the economy is due to reopen.
In an attempt to protect incomes, Rishi Sunak also announced that grants for the self-employed would continue into the autumn.
However, employers will have to start to contribute to the furlough scheme – under which staff who are unable to work receive 80 per cent of their wages from the Government.
More than 11million jobs have been furloughed under the Coronavirus Job Retention Scheme, which had been due to close at the end of April. It will now continue until the end of September.
It has been credited with slowing the pace of job losses as tens of thousands of businesses remain shut. But it is estimated to cost £14billion per month.
Jonathan Lea and Juliette Barrios (pictured) from Loxleys Restaurant and Wine Bar in Stratford-upon- Avon, Warwickshire, welcomed the extension of furlough
Yesterday, the Chancellor announced a taper, which will require businesses to begin to contribute to the 80 per cent wages as they reopen.
He told MPs: ‘Nothing will change until July, when we will ask for a small contribution of just 10 per cent and 20 per cent in August and September.’
The extension was welcomed by Jonathan Lea, 31, who manages Loxleys Restaurant and Wine Bar in Stratford-upon-Avon Warwickshire. It employs more than 30 staff. Mr Lea is currently on furlough alongside his fiancee Juliette Barrios, 23, a supervisor at the restaurant.
‘The extension to the furlough scheme is fantastic for us,’ he said. ‘It has been an absolute godsend throughout this pandemic as it means we haven’t lost a staff member.’ Support for the self-employed will be expanded so that 600,000 more who were ineligible can now apply.
The next grant, from February to April, will pay 80 per cent of average trading profits up to £7,500, while the final grant, from May to the end of September, will be cut to 30 per cent for those whose turnover has fallen by less than 30 per cent.
Business rates and recovery loans
High streets were handed a £12billion boost yesterday to help them recover from the pandemic.
The Chancellor handed beleaguered firms a £6.8billion business rates holiday, extending relief until April 2022, as well as £5billion of ‘restart grants’ – worth up to £18,000 each.
Rishi Sunak announced a three-month extension to the break for shops, bars, restaurants and other leisure firms, cutting the tax to zero until the end of June.
For the following nine months until the end of March 2022, firms will have their business rates bill discounted by two-thirds.
The Treasury will also hand out £5billion of restart grants to ‘help businesses reopen and get going again’, with non-essential retailers able to claim up to £6,000 per shop.
Beauty entrepreneur Elisabeth Bester, 42, (pictured) from Buckinghamshire, is among those ‘grateful’ for the recovery grants
Hospitality, leisure, gyms and personal care businesses will be eligible for grants of up to £18,000 – reflecting the longer they been closed for.
Beauty entrepreneur Elisabeth Bester, 42, is among those ‘grateful’ for the recovery grants. The mother-of-two runs the Marlow Face and Body clinic in Buckinghamshire.
She has lost around 90 per cent of her revenue during lockdown. Mrs Bester said: ‘I am very grateful for the restart grants as I think they will plug the immediate issues for lots of salons. They will certainly help with bills and managing cash flows.’
Helen Dickinson, of the British Retail Consortium, said: ‘The Chancellor has taken steps to avoid the business rates cliff edge, and restart grants provide a vital injection of funding during this extremely challenging period.’
Mike Cherry, of the Federation of Small Businesses, said the Budget would ‘help many small firms with their final push through to September’.
The handouts will be backed up by a slew of loan guarantees, allowing firms of ‘any size’ to borrow between £25,000 and £10million. Asda, Morrisons, Tesco and Sainsbury’s said they would not accept the rates relief and will pay the tax in full for 2021/22.
Universal credit – Six more months of £20 uplift in benefit
The Universal Credit uplift is being extended until September.
The Chancellor said the temporary £20 rise, introduced at the start of the pandemic, will remain in place for half a year, ‘well beyond’ the end of the national lockdown.
Working Tax Credit claimants will receive equivalent support over the next six months through a one-off payment of £500, due to the way the system works.
Charities had been calling for the increase to be kept in place for at least a year or for it to be made permanent and urged the Government to think again.
Action for Children’s Imran Hussain said: ‘It makes no sense to cut this lifeline in six months when the furlough scheme will have ended and unemployment is expected to be near its highest – exactly when families will need it most. Families need help and certainty, not a stay of execution.’
Dr Julia Faulconbridge, of the British Psychological Society, said: ‘Psychologically the impact of a six-month extension and the uncertainty this brings is very damaging and this decision will have a significant impact on the mental and physical health of those already at risk as a result of living in poverty.
‘People need security at this turbulent time – the Chancellor has failed to provide that.’
James Taylor, of Scope, cited a Health Foundation poll suggesting 59 per cent of the public support making the uplift permanent, saying: ‘A temporary extension isn’t enough; another six months would mean the uplift ending just as unemployment is set to peak.
‘This creates the very real risk of plunging many disabled people into poverty.’
Richard Kramer, of Sense, said: ‘A six-month extension is not enough and doesn’t take into account the millions of disabled people on legacy benefits who have not received any uplift at all so far.’