Jeremy Hunt delivered his much-anticipated Spring Budget statement yesterday. Speaking in the House of Commons, the Chancellor set out the Treasury’s taxation and spending plans for the next financial year, as well as giving an update on the economic forecast.
It’s expected to be the last budget announcement before the next general election, and rumours had swirled that it would include some big changes to taxes and spending.
Beginning his speech, The Chancellor claimed that “we have turned the corner on inflation” with the latest figures showing a drop to 4% from the crippling highs of 11% in October 2022. Forecasts from the Office for Budget Responsibility now show inflation falling below the 2% Bank of England target “in just a few months’ time”- nearly “a whole year earlier than forecast in the Autumn Statement.”
Praising the Conservative government for continuing to bring inflation down, Hunt told MPs that his plans will create a “budget for long-term growth”, promising that new measures will mean “more investment, more jobs, better public services, and lower taxes.”
After being largely overlooked in the 2023 Autumn Statement, measures aimed at supporting the housing sector were widely expected to include proposals for a 99% mortgage scheme, a cut to inheritance tax, and stamp duty relief for downsizers.
Unfortunately, it appears that many in the industry have once again been left disappointed by the lack of significant measures to support homeowners, landlords, and the UK property market.
Regeneration Schemes
The Chancellor could barely be heard at times, with more jeering than usual in the Commons. As he promised that “building homes for young people” was a priority in his speech, two regeneration schemes in London were announced.
A plan to transform Barking Riverside and Canary Wharf with £242 million of investment will see 8,000 new houses built, with half of the homes at Barking Riverside designated as affordable. Additional investments in Blackpool, Sheffield and Liverpool were also highlighted, but no further details were given.
Capital Gains Tax reduction
In a bid to boost revenues and increase property transactions, Capital Gains Tax will be reduced from 28% down to 24% for higher or additional rate taxpayers selling a residential property.
Multiple Dwellings Relief
Dealing a blow to property investors, the Multiple Dwellings Relief, a stamp duty relief for people buying more than one property, will be abolished after Hunt claimed that the tax relief was being exploited.
Created to encourage investment in the private rented sector, an external evaluation found “no strong evidence that it had done so and that it was being regularly abused.”
Furnished Holiday Lettings
Tax breaks for second home owners who let out their furnished properties to holiday makers will also be axed, amidst claims that it was depriving long-term renters of affordable accommodation.
Hunt commented: “I am concerned this tax regime is creating a distortion meaning there are not enough properties available for long-term rental by local people. So, to make the tax system work better for local communities I am going to abolish the Furnished Holiday Lettings regime.”
Other notable announcements included a rise to the VAT registration threshold for businesses, from £85,000 to £90,000, starting from April. Additionally, Hunt also announced the scrapping of the controversial 'non-dom' tax status, a significant change that had previously been staunchly resisted by the government.
Weighing in on yesterday’s budget announcement, Managing Director of Auction House, Jeremy Prior, commented: “Regrettably, and despite earlier hopes, the Chancellor had little to no headroom to make any real ‘big news statements’ in what is likely to be the Conservatives final budget for some time.”
“The removal of interest tax relief on holiday lets will no doubt be welcomed by many local people whose towns have been awash with investors buying property for short term lets. However, it is questionable as to whether this will have any real benefit for the struggling private rented sector.”
Jeremy continued: “A further cut of £0.02 in national insurance contributions must be welcomed, however the accusation of giving with one hand and taking from the other does have a ring of truth about it.”
“This Conservative government I am afraid is approaching the end game and to be frank, a period in opposition is exactly what they need. How the Tory party have reached this position after the landslide election result in 2019 is beyond credulity and Messrs Johnson and Truss should hang their heads in shame.”
