The new Chancellor of the Exchequer, Kwasi Kwarteng, didn’t waste any time making his mark with a raft of tax cutting, including a reduction in stamp duty in an immediate and permanent move designed to boost the economy.
The main measures in his emergency Budget include the reversal of the National Insurance increase, the scrapping of the additional tax rate of 45 per cent and the basic income tax cut to be introduced a year early, dropping to 19 per cent in April 2023. The previously announced increases in corporation tax were also dropped, while the cap on bankers’ bonuses was removed. The raft of changes were designed to boost the economy and spending but the potential cost of such measures sent the markets, and the pound, into freefall.
Before Friday’s emergency Budget, no stamp duty was payable on the first £125,000 of a property’s value; this has been doubled to £250,000, saving everyone £2,500. Recognising the contribution of first-time buyers to the overall health of the housing market, there was further assistance targeted at this group. Before the Budget, they paid no stamp duty on the first £300,000 of property’s value but this was increased to £425,000. The Government also increased the value of a property on which first-time buyers can claim relief from £500,000 to £625,000, particularly useful for those buying in London and the southeast where property prices are higher.
With signs indicating that the frenetic pace of the housing market has been slowing, the stamp duty reduction comes at just the right time. Any measure which maintains momentum is welcome and with interest rates continuing to rise, a saving on the initial purchase price will go some way to offsetting higher mortgage costs.
It is more important than ever for borrowers to seek advice when taking out a mortgage, particularly if you need one arranged quickly before rates rise further, or you have complex income streams so can’t get what you need from a high-street lender. This is where AWS Private Finance can help – we are whole-of-market brokers who can help arrange the right mortgage for your circumstances. Please get in touch for more information.