Here are some of the things that may directly impact landlords in the Sept 2022 mini-budget:
• Stamp duty threshold raised from £125,000 to £250,000: Effective from today the threshold at which stamp duty applies will increase, meaning that no stamp duty needs to be paid on the first £250,000 of a property purchase (second home surcharge still applies).
• First-time buyers stamp duty threshold raised from £300,000 to £425,000: Effective from today, first-time buyers will only start paying stamp duty above £425,000.
• First-time buyer relief increased: Effective from today, first-time buyers can claim stamp duty relief on property purchases up to £625,000, rather than the previous £500,000.
• Abolition of the highest income tax rate: The 45% rate for earnings above £150,000 will be abolished
• Income Tax cut by 1%: Income tax will be cut from 20% to 19% in April 2023 – a year earlier than planned
• National insurance contributions cut: National Insurance payments were increased in April 2022 by 1.25%, but this will now be reversed from 6 November. This will save individuals an average of £330 next year.
• Corporation tax rise cancelled, keeping it at 19% as government sets sights on 2.5% trend rate of growth
• Household bills support: A price cap guarantee and unit price limitation are expected to reduce household bills by £1,000 this year.
The part of the announcement that has the biggest impact on the property market – the cut in stamp duty – is sensible given the current rate of inflation and the fact that house prices have grown significantly over the past two years, but is unlikely to have a substantial impact on the London property market. It is a move that will be welcomed by all, but especially by first-time buyers and is likely to see an increased interest in properties under the £625,000 threshold.
However, the announcement was preceded by the Bank of England’s announcement that interest rates were being increased by 0.5% from 1.75% to 2.5% – the highest rate since 2008. With mortgage rates rapidly rising and the cost of living still climbing, many buyers are being more cautious about buying property and we are not expecting to see the same mad rush to complete purchases as we did in 2021 when the government offered the stamp duty holiday.
Factsheets on each of the major measures can be found here:
- The Growth Plan: Factsheet on cancellation of National Insurance rise and Health and Social Care Levy
- The Growth Plan 2022: Factsheet on Investment Zones
- The Growth Plan 2022: Factsheet on Corporation Tax
- The Growth Plan 2022: Factsheet on Stamp Duty Land Tax
- The Growth Plan 2022: Factsheet on Income Tax
The full annoucement can be found here – https://www.gov.uk/government/news/chancellor-announces-new-growth-plan-with-biggest-package-of-tax-cuts-in-generations