As George Osborne prepares to give the first Budget speech of the new government, we outline some of things the Chancellor could announce that could affect your UK investment.
For the second time this year, the famous red briefcase is about to be lofted in the air outside 10 Downing Street.
On Wednesday (8th July) afternoon, George Osborne will deliver his summer Budget speech to the House of Commons. Although the Chancellor only presided over one just four months ago, it will be the first all-Conservative Budget since 1997.
But why is there another Budget now, and what things can we expect to be outlined in Westminster?
A lot has happened since April
Unlike the last Budget, Osborne doesn’t need to cater for his coalition partners this time. This will be an all blue announcement, and many political correspondents are curious to find out how the Conservatives plan to meet the economical promises they made in their successful election campaign.
The Chancellor already has a Spending Review pencilled in for the autumn, and an Autumn Statement in the winter, so the fact that Osborne also has this Budget speech to give in July suggests that he has lots that he needs to reveal.
What can we expect?
The first Budget speeches of a new government have historically focused on raising taxes and cutting national spend.
Reducing the national debt was key to the Conservative’s General Election Manifesto, so it’s likely that Osborne will give MPs an idea of the areas that the new government has identified to make cuts.
Here’s what is predicted to be outlined:
- Changes to the Inheritance Tax threshold – it’s expected to be raised to £1 million. Crucially, however, the Chancellor is likely to give details of a ‘family home allowance’, meaning that elderly home owners can choose to downsize their property without fear of missing out on this new tax break. This is designed to drive the performance of the UK property market and bring many large, high-value properties back onto the market.
- New tax charges for ‘non-domicile’ individuals – increasing annual tax charges for those British citizens with their main residential address overseas and whom only pay tax on their UK earnings and assets, and not on their foreign income and assets.
- Changes to rental rates for higher earners living in council and housing association properties – workers that earn in excess of £40,000 in London, and in excess of £30,000 in the rest of the UK, will be told from 2017/18 that they will have to pay market rent, or close to market rent, for their home.
- A reduction in household benefit caps – it’s expected it will fall from £26,000 to £23,000 per year.
- Abolishing TV licence fees for over-75s – the BBC would have to facilitate this by making their own cuts to the corporation.
Is anything in the Budget likely to impact on my UK property investment?
We shouldn’t see anything as significant as was revealed in April’s speech (which confirmed the extension of recent pensions reforms to those savers that had already bought an annuity), but the Chancellor could announce something that no political expect has foreseen.
For example, buried deep within his Budget document in the Spring Mr Osborne gave more powers to renters by enabling them to send requests to landlords to be able to sub-let empty rooms and space in their property.
The General Election result means that investors are free from the threat of rent caps proposed by Labour, but it will still be worth following with a keen eye as the Chancellor begins a three-year journey of completely eradicating the UK’s national debt.
Join us from 11am on Wednesday at SelectProperty.com where we will be covering The Budget speech and providing analysis for UK property investors, highlighting key reforms and what impact any of the changes may have on your investment.