The chancellor, George Osborne, addressed the commons yesterday to outline the Conservative Government's Autumn Statement. The chancellor revealed the state of the UK’s financial security, and set out proposals for what many will regard as the Conservative manifesto, into what is likely to be a fiercely contested election year.
Just as the Labour party chose to set out their own election policy with the mansion tax spearheading their plan to tackle the property market, Osborne has finally heeded calls from the mortgage and property sector for stamp duty tax reform. Within his statement the chancellor confirmed that from midnight the tax would not be applied to any property purchase under £125,000, then a 2 per cent charge would be levied against the portion between £125,000 and £250,000, 5 per cent would be charged on properties to £925,000, 10 per cent up to £1.5m and finally 12 per cent on any property valued higher than £1.5m.
The move has been both praised and questioned by market experts. While the move will certainly benefit buyers previously priced out from buying a home above £250,000, due to the 3 per cent levy charged for the entire purchase value, some economic commentators have suggested the move will exasperate the situation in London further.
A property economist for Capital Economics, Matthew Pointon, suggested that the move will spur further price inflation in the capital: “If anything I think this will add to the steam in London. You have the increase in prices, sentiment will improve and transaction constraints will be eased as well. Vendors will know that buyers have made that saving on the stamp duty and will seek to take advantage of that by raising their asking price.”
Mr Osborne noted that borrowing levels were likely to be higher than previously predicted, but he suggested that the UK would be “into the black” by 2019/20. He also introduced a revision to health care spending in the UK, with a further £2bn to be spent to support health services, and VAT for hospices and air ambulances to be refunded.
Alongside the recent downward slide on the price of fuel, the chancellor has outlined the plan to freeze fuel duty charges, and has pledged a focus on supporting businesses throughout the UK. As the Christmas period draws near, it is likely to again to be the case that online businesses see a further uplift in profits, while their high street counterparts struggle to compete. To tackle this long standing issue, Osborne has elected to review business rates for high street stores, to assist them in battling with internet retailers.
Labour chose to remind the chancellor that he had not managed to hit the Government’s target, as outlined in the 2010 election campaign, to balance the UK economy. The shadow chancellor, Ed Balls said, in relation to the chancellor, “He is going to carry on missing his deficit target for year after year.” He also suggested that the chancellor had not addressed growing concerns with the nation’s wages and living standards, claiming that there is a “cost of living crisis” currently affecting the UK.
Mr Osborne responded to say that “The deficit is falling this year and every year”, but did curtail this statement by admitting that the global economy is still a major concern.
Article By: Simon Butler, Senior Mortgage Consultant at Contractor Mortgages Made Easy
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