Spring Budget 2021 – Property announcements

There were several welcome announcements for property owners in the Budget – Tax Director James Clark covers the key points for consideration.

Stamp duty

As hoped by many house buyers in England, the current stamp duty land tax holiday has been extended in full for a further three months.  The zero percent threshold of £500,000 now remains in place until 30 June 2021.

An unexpected bonus was that instead of reverting immediately back to the £125,000 starting threshold, the zero percent band will drop to £250,000 for the period 1 July to 30 September 2021, before returning to £125,000 on 1 October 2021.

Mortgage guarantee

Announced before the Budget, the government will introduce a new mortgage guarantee scheme in April 2021, designed to help homebuyers with small deposits.

The scheme will provide a guarantee to mortgage lenders across the UK who offer mortgages to homebuyers with a deposit of just 5%.  The scheme is to be available for new mortgages up to 31 December 2022 on homes with a value of up to £600,000.

Business rates

The 100% relief from business rates for the retail, hospitality and leisure sectors in England will continue until 30 June 2021. After this date the relief drops to 66% until 31 March 2022.  This is a much-needed relief for shops, pubs, restaurants, cinemas, and hotels. Children’s nurseries will also qualify for relief in the same way.

VAT

A further measure to provide financial assistance to the hospitality sector is the extension of the temporary VAT cut for goods and services. The reduced rate of 5% will now apply until 30 September 2021, and to help businesses manage the transition back to the standard 20% VAT rate, a temporary 12.5% rate will apply for the period 1 October 2021 to 31 March 2022.

Whilst this may be good news for holiday goers booking hotels or caravans this summer, it is up to the business whether to pass on the VAT cut to the customer.

Freeports

Announced in the Budget was the concept of ‘tax sites’ within Freeports. Freeports are located around shipping ports or airports, and are areas where businesses will benefit from more generous tax reliefs, simplified customs procedures and wider government support. Businesses in these tax sites will be able to benefit from a number of property rated tax reliefs.

Capital allowances – A 10% allowance will be available for businesses constructing or renovating non-residential property within a tax site. This means such an investment will be fully tax relieved after 10 years rather than the standard 33.3 years. To qualify, the building or structure must be brought into use in the business before 30 September 2026.

Stamp duty - Full relief from stamp duty land tax will be available on the purchase of land or property used for a qualifying commercial purpose. The relief will be available until 30 September 2026.

Business rates - Full relief from business rates will be available to all new businesses (and certain existing businesses where they expand), until 30 September 2026. Relief will apply for five years from the point at which each beneficiary first receives relief.

The government will create eight new Freeports in England which are expected to begin operations from late 2021.  These are East Midlands Airport, Felixstowe & Harwich, Humber, Liverpool City Region, Plymouth and South Devon, Solent, Teesside and Thames.

Here to help

If you have any questions relating to the budget announcement and how it may impact you, please contact our team and they will be happy to help.