Chancellor Rishi Sunak is set to extend the Stamp Duty Land Tax relief until the end of June in order “to keep the property market firing” as Britain emerges from its lockdown on 21st June.
The Times has reported this morning that Chancellor Sunak is due to announce his Spring Budget on Wednesday next week, where more details will be announced. Currently, we do not know whether the three-month extension is for all buyers and sellers or only for those who currently have a transaction pending, meaning a new cliff-edge scenario may occur when this extension ends in June.
There are concerns that without a tapered ending to this extension, there will be a new group of buyers and sellers that will be in the same difficult situation in June where they may not complete before the extension deadline.
We believe the parameters of the relief will be the same, with no stamp duty due for property transactions under £500,000. This extension is predicted to cost the treasury another £1 billion. Centre for Policy Studies (CPS) recent report has shown that transaction numbers at the end of quarter four were at their highest level since 2007, rising from 132,090 in Q2 up to 316,300 in Q4. If transaction numbers raise again following this announcement, the cost to the treasury may be significantly higher.
The Chancellor is also reported to be extending the Furlough scheme for a further three months until the end of July, costing the treasury another £4 billion a month.
The treasury will need to claim back the huge amounts of money being spent on these two schemes. It has been predicted that the Chancellor will also commit to raising Corporation Tax across the duration of the current parliament (nearly four years) from 19 to 25%.
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