Against the backdrop of an uncertain economic outlook stemming from the global Covid-19 pandemic and its associated restrictions, Chancellor Rishi Sunak has today delivered the government’s Spring Budget 2021.
With Sunak stating that the government are “using the full measure of our fiscal firepower to protect the jobs and livelihoods of the British people”, what could the Spring Budget mean for you as an education professional?
Stamp Duty and 5% deposit mortgages
The Stamp Duty holiday, which increased the tax threshold from £125,000 to £500,000, has been extended by three months until the end of June. From then it will be set at £250,000 until the end of September.
A new mortgage guarantee scheme will enable first-time buyers and existing homeowners to secure a mortgage on homes worth up to £600,000 with just a 5% deposit.
Wesleyan’s Jonathan Halberda said: “This will broaden the options individuals have for financing a home and will be particularly welcomed by the younger generations. However, buyers will still need to pass lenders’ affordability checks to access a mortgage.”
Jonathan Halberda, Senior Financial Advisor, Wesleyan, anticipates that the 3-month extension of the Stamp Duty holiday will be welcomed by teachers who are looking to buy, particularly those who were at risk of missing out on the benefits due to administrative bottlenecks in completing deals.
Pensions and savings
The chancellor froze the pensions lifetime allowance, which usually rises with inflation, at £1,073,100 for five years until April 2026.
Commenting on this lifetime allowance freeze, Parminder Gill, Advice Policy Consultant, Wesleyan, said: “Freezing the lifetime allowance creates a less-favourable tax-regime for pension savers and these changes need to be carefully considered by anyone saving for retirement.”
The 20% Income Tax basic rate will increase from £12,500 to £12,570 next year, when the higher rate threshold will also increase from £50,000 to £50,270. Both rates will then be frozen until 2026. The allowance usually rises with inflation, so this freeze risks pushing many more taxpayers into higher bands.
The current Inheritance Tax limit of £325,000, which has remained unchanged since 2011, has been frozen until April 2026.
The annual exempt amount for Capital Gains Tax was also frozen until April 2026.
The longstanding freeze on Fuel Duty will remain in place, which the Treasury says saves the average driver around £100 a year.
We're here to help
If you have any questions regarding your financial wellbeing or any of the topics covered in this overview, your local Wesleyan Financial Services Consultant is on hand to offer practical support, guidance and advice.