September 2020 / United Kingdom

Residential property transactions rose 15.6% in August following introduction of stamp duty holiday.

• rise in sales supports nearly three quarters of a million jobs in the sector – with new homeowners also spending extra cash on decorating, furniture and appliances
• construction sector reports 30% boost in output in July

House sales rose 15.6% in August following the introduction of the stamp duty holiday – helping to protect nearly three quarters of a million jobs in the housing sector and wider supply chain, new figures revealed today.

After a 14.5% rise in July, residential property transactions in August rose a further 15.6% as more people decided to buy a new home or move house. The increase in transactions came after the Chancellor announced a stamp duty holiday at the start of July that will last until March next year.

The move has helped to protect nearly 750,000 jobs, benefitting businesses across the housing supply chain and beyond, with the Bank of England estimating that households who move home are much more likely to purchase a range of durable goods, such as furniture, carpets or major appliances.

It is expected that among others housebuilders, estate agents, tradespeople, DIY stores, removal and cleaning firms could all benefit from the increased activity.

Chancellor Rishi Sunak said:

Every home sold means more jobs protected – helping us to deliver on our Plan for Jobs.

But this isn’t just about the housing market. Owners doing up their homes to sell and buyers reinvesting stamp duty savings to make their new house feel like a home are also firing up local businesses, supporting, creating and protecting jobs across the country.

As part of its Plan for Jobs, the government introduced a temporary stamp duty holiday for residential properties worth up to £500,000 effective from 8 July 2020 until 31 March 2021.

The holiday means nine out of ten people getting on or moving up the property ladder will pay no SDLT at all. This measure delivers an average saving of £4,500 in SDLT.

The government wants people to feel confident to move, to buy, to sell, to renovate, and to improve their homes, driving growth and supporting jobs.

Figures from Building Societies Association show that there has been a marked uplift in the number of people who say that now is a good time to buy a property - 37% in September compared to 25% in June, whilst figures from Checkatrade show that:

• more than one in ten (11%) of Brits are hoping to have bought a new home by the end of March 2021
• 33% of those hoping to move plan to spend the ‘extra’ cash on home improvements and renovations.

Mike Fairman, CEO at Checkatrade, said:

Since the Government’s stamp duty changes came into effect earlier this year, we’ve seen record numbers of home improvement enquiries to the site suggesting that consumers are planning to reinvest their stamp duty savings straight back into their homes.

This increase has not only benefitted Checkatrade as a business, but also the livelihoods of the traders we represent.

Private housing output grew by about 30% in July compared to June, the single largest contributor to the monthly growth in construction output that month.

Notes

• As part of its Plan for Jobs, the government has temporarily increased the Nil Rate Band of Residential SDLT, in England and Northern Ireland, from £125,000 to £500,000. This applies from 8 July 2020 until 31 March 2021 and cuts the tax due for everyone who would have paid SDLT. Nearly nine out of ten people getting on or moving up the property ladder will pay no SDLT at all.
• 87% of Primary Residence transactions in England and NI will no longer pay any SDLT, 93% outside of London and SE.
• The Home Builders Federation estimate that 240,000 people are directly employed by housebuilders and their contractors and the sector supports a further 300,000-500,000 people indirectly employed.

Please see below for figures from:

• Bank of England
• Building Societies Association
• National Statistics: monthly property transaction statistics
• Checkatrade (contact directly)
• In 2019, expenditure on home-move related items was around 5% of total consumption (ONS National Accounts data).
• SDLT is devolved in Scotland and Wales. The Scottish and Welsh governments benefited from this SDLT cut through an increase in their block grants, enabling them to provide a similar tax cut.

https://www.gov.uk/government/news/house-sales-rise-following-introduction-of-stamp-duty-holiday-supporting-nearly-750000-jobs

The chancellor's policy of suspending of stamp duty on the first £500,000 of all property sales in England and Northern Ireland has helped boost house prices.

August saw the highest monthly price rise in more than 16 years, says the Nationwide. It describes the housing market recovery as "unexpectedly rapid".

So what has Chancellor Rishi Sunak done to try to help homebuyers?

What is stamp duty?

Stamp duty is a tax paid by people buying properties, although it varies slightly across the UK.

In England and Northern Ireland buyers pay Stamp Duty Land Tax.

In Scotland it is Land and Buildings Transaction Tax, while in Wales buyers pay Land Transaction Tax.

The amount handed to the government depends on where you are in the UK, and the price of the property.

The changes to stamp duty only apply to buyers in England and Northern Ireland.

• Stamp duty holiday: The winners and the losers
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What has changed?

The government has temporarily increased the stamp duty threshold to £500,000 for property sales in England and Northern Ireland, until 31 March 2021.

Anyone completing on a main residence costing up to £500,000 before then will not pay any stamp duty, and more expensive properties will only be taxed on their value above that amount.

This will save buyers as much as £15,000, if they are buying a property of £500,000 or more.

The move was aimed at helping buyers who have taken a financial hit because of the coronavirus crisis.

It was also intended to boost a property market hit by lockdown, which - according to the Halifax - saw house prices fall for four months in a row.

The average stamp duty bill will drop by £4,500, Mr Sunak has suggested, with nearly nine out of 10 people buying a main home this year paying no stamp duty at all.

However, critics worry it could encourage people who were planning to buy next year to accelerate their plans to take advantage of the tax break. This could lead to a slump in demand when the tax break ends.

How much stamp duty will I pay now?

If the property purchased is your main home, you won't pay any stamp duty on it at all if it costs £500,000 or less.

The next portion of the property's price (£500,001 to £925,000) will be taxed at 5%, and the £575,000 after that (£925,001 to £1.5m) at 10%.

The remaining amount (over £1.5 million) will be taxed at 12%. You can calculate how much you are liable to pay here.

Before the announcement, stamp duty in England and Northern Ireland was paid on land or property sold for £125,000 or more, while first-time buyers did not pay any stamp duty up to £300,000. But this stamp duty holiday replaces the first-time buyer discount.

Landlords and second home buyers are also eligible for the tax cut but will still have to pay the extra 3% of stamp duty they were charged under the previous rules.

What about Scotland and Wales?

In Scotland, the rates on Land and Buildings Transaction Tax are 2% on £145,001-£250,000, 5% on £250,001-£325,000, 10% on £325,001-£750,000, and 12% on any value above £750,000.

Scottish landlords pay an extra 4% Land and Buildings Transaction Tax on top of standard rates.

In Wales, the rates on Land Transaction Tax are 3.5% on £180,001-£250,000, 5% on £250,001-£400,000, 7.5% on £400,001-£750,000, 10% on £750,001-£1.5m, and 12% on any value above £1.5m.

Welsh landlords pay an extra 3% Land Transaction Tax on top of standard rates.

How much does stamp duty raise?

The government's annual take from stamp duty is around £12bn, according to the latest figures released by HM Revenue and Customs (HMRC).

That's roughly equivalent to 2% of the Treasury's total tax take.

The nine-month stamp duty holiday in England and Northern Ireland - from July 2020 to March 2021 - will cost the Treasury an estimated £3.8bn.

https://www.bbc.com/news/business-53319433

The Chancellor Rishi Sunak today outlined additional government support to provide certainty to businesses and workers impacted by coronavirus across the UK. Delivering a speech in Parliament, the Chancellor announced a package of measures that will continue to protect jobs and help businesses through the uncertain months ahead as we continue to tackle the spread of the virus. The package includes a new Jobs Support Scheme to protect millions of returning workers, extending the Self Employment Income Support Scheme and 15% VAT cut for the hospitality and tourism sectors, and help for businesses in repaying government-backed loans. The announcement comes after the Prime Minster set out further measures to combat the spread of the virus over the winter, while preserving the ability to grow the economy. The Chancellor of the Exchequer Rishi Sunak said:

The resurgence of the virus, and the measures we need to take in response, pose a threat to our fragile economic recovery… Our approach to the next phase of support must be different to that which came before.

The primary goal of our economic policy remains unchanged - to support people’s jobs - but the way we achieve that must evolve.

Since the beginning of the pandemic, the government has taken swift action to save lives, limit the spread of the disease and minimise damage to the economy. Ministers have introduced one of the most generous and comprehensive economic plans anywhere in the world with over £190 billion of support for people, businesses and public services - including paying the wages of nearly 12 million people, supporting over a million businesses through grants, loans and rates cuts and announcing the Plan for Jobs in July. The government has been consistently clear that it would keep its support under review to protect jobs and the economy, with today’s action reflecting the evolving circumstances and uncertainty of the months ahead. The package of measures, which applies to all regions and nations of the UK, includes:

Support for workers

A new Job Support Scheme will be introduced from 1 November to protect viable jobs in businesses who are facing lower demand over the winter months due to coronavirus. Under the scheme, which will run for six months and help keep employees attached to the workforce, the government will contribute towards the wages of employees who are working fewer than normal hours due to decreased demand. Employers will continue to pay the wages of staff for the hours they work - but for the hours not worked, the government and the employer will each pay one third of their equivalent salary. This means employees who can only go back to work on shorter time will still be paid two thirds of the hours for those hours they can’t work. In order to support only viable jobs, employees must be working at least 33% of their usual hours. The level of grant will be calculated based on employee’s usual salary, capped at £697.92 per month. The Job Support Scheme will be open to businesses across the UK even if they have not previously used the furlough scheme, with further guidance being published in due course. It is designed to sit alongside the Jobs Retention Bonus and could be worth over 60% of average wages of workers who have been furloughed – and are kept on until the start of February 2021. Businesses can benefit from both schemes in order to help protect jobs. In addition, the Government is continuing its support for millions of self-employed individuals by extending the Self Employment Income Support Scheme Grant (SEISS). An initial taxable grant will be provided to those who are currently eligible for SEISS and are continuing to actively trade but face reduced demand due to coronavirus. The initial lump sum will cover three months’ worth of profits for the period from November to the end of January next year. This is worth 20% of average monthly profits, up to a total of £1,875. An additional second grant, which may be adjusted to respond to changing circumstances, will be available for self-employed individuals to cover the period from February 2021 to the end of April - ensuring our support continues right through to next year. This is in addition to the more than £13 billion of support already provided for over 2.6 million self-employed individuals through the first two stages of the Self Employment Income Support Scheme – one of the most generous in the world.

Tax cuts and deferrals

As part of the package, the government also announced it will extend the temporary 15% VAT cut for the tourism and hospitality sectors to the end of March next year. This will give businesses in the sector - which has been severely impacted by the pandemic - the confidence to maintain staff as they adapt to a new trading environment. In addition, up to half a million business who deferred their VAT bills will be given more breathing space through the New Payment Scheme, which gives them the option to pay back in smaller instalments. Rather than paying a lump sum in full at the end March next year, they will be able to make 11 smaller interest-free payments during the 2021-22 financial year. On top of this, around11 million self-assessment taxpayers will be able to benefit from a separate additional 12-month extension from HMRC on the “Time to Pay” self-service facility, meaning payments deferred from July 2020, and those due in January 2021, will now not need to be paid until January 2022.

Giving businesses flexibility to pay back loans

The burden will be lifted on more than a million businesses who took out a Bounce Back Loan through a new Pay as You Grow flexible repayment system. This will provide flexibility for firms repaying a Bounce Back Loan. This includes extending the length of the loan from six years to ten, which will cut monthly repayments by nearly half. Interest-only periods of up to six months and payment holidays will also be available to businesses. These measures will further protect jobs by helping businesses recover from the pandemic. We also intend to give Coronavirus Business Interruption Loan Scheme lenders the ability to extend the length of loans from a maximum of six years to ten years if it will help businesses to repay the loan. In addition, the Chancellor also announced he would be extending applications for the government’s coronavirus loan schemes that are helping over a million businesses until the end of November. As a result, more businesses will now be able to benefit from the Coronavirus Business Interruption Loan Scheme, the Coronavirus Large Business Interruption Loan Scheme, the Bounce Back Loan Scheme and the Future Fund. This change aligns all the end dates of these schemes, ensuring that there is further support in place for those firms who need it.

Investment in public services

At the start of the pandemic, the Chancellor pledged to give the NHS and public services the support needed to respond to coronavirus – and as of today, £68.7 billion of additional funding has been approved by the Treasury, including £24.3 billion since the Summer Economic Update in July. This funding has helped ensure the procurement of PPE for frontline staff, provided free school meals for children while at home and protected the country’s most vulnerable. In addition, the £12 billion funding to roll-out the Test and Trace programme has played a key role helping to unlock the economy, enabling businesses like restaurants and bars to serve customers again. As announced earlier this year, the Treasury has also guaranteed the devolved administrations will receive at least £12.7 billion in additional funding. This gives Scotland, Wales and Northern Ireland the budget certainty to for coronavirus response in the months ahead.

Responses from business groups

Dame Carolyn Fairbairn, CBI Director-General, said:

These bold steps from the Treasury will save hundreds of thousands of viable jobs this winter. It is right to target help on jobs with a future, but can only be part-time while demand remains flat. This is how skills and jobs can be preserved to enable a fast recovery. Wage support, tax deferrals and help for the self-employed will reduce the scarring effect of unnecessary job losses as the UK tackles the virus. Employers will apply the same spirit of creativity, seizing every opportunity to retrain and upskill their workers.

The Chancellor has listened to evidence from business and acted decisively. It is this spirit of agility and collaboration that will help make 2021 a year of growth and renewal.

Mike Cherry OBE, Federation of Small Businesses National Chair, said:

The UK’s small businesses are facing an incredibly difficult winter. Today’s support package is the flipside of the coin to Tuesday’s COVID-19 business restrictions. It is a swift and significant intervention, extending emergency SME loans, creating new wage support for small employers and the self-employed, and providing cashflow help on VAT deferrals and new Time To Pay for any tax bills to HMRC.

We welcome that the Chancellor is ensuring that decisions to protect public health are informed by the need to protect the economy, people’s jobs and prospects for young people in our schools and workplaces.

BCC Director General Adam Marshall said:

The measures announced by the Chancellor will give business and the economy an important shot in the arm. Chambers of Commerce have consistently called for a new generation of support to help preserve livelihoods and ease the cash pressures faced by firms as they head into a challenging and uncertain winter. The Chancellor has responded to our concerns with substantial steps that will help companies preserve jobs and navigate through the coming months. The new wage support scheme will help many companies hold on to valued employees after furlough ends, and the extension of business lending schemes and tax forbearance will lessen the immediate pressure on cash flow for many affected firms.

As we look past the immediate challenge, more will need to be done to rebuild and renew our economy. Chambers of Commerce across the UK will continue to work with government to ensure the benefits of these schemes are delivered to firms on the ground.

Source: https://www.gov.uk/government/news/chancellor-outlines-winter-economy-plan