The Bank of England have held the base rate this lunchtime, with interest rates largely becoming a side-story for most people today. The Chancellor George Osborne announced his pre-election Autumn Statement yesterday.
As many contractors will be examining the immediate impact of Mr Osborne’s announcements on their finances this morning, it is important that the detail behind the budget is also considered. It is no coincidence that the much publicised austerity measures have largely become forgotten, as the Government try to curry favour with the public with the election only 5 months away.
The headline-grabbing stamp duty changes will mean that many contractors will benefit if they are looking to buy property with a purchase price between £125,000 and £500,000. For example, a contractor purchasing their new home for £300,000 would have paid £9,000 in stamp duty under the old structure. The same purchase price now means a stamp duty bill of only £5,000, a massive saving of £4,000.
Contractors who save, particularly those getting closer to retirement, were also given good news with tax relief on the starting rate, and the restrictions around pensions were also given the largest shake-up for decades, with those getting to retirement having a greater choice around how they deploy their retirement fund.
Andy McBride, Business Development Director at Contractor Mortgages Made Easy, made the following observation around the announcements.
“The stamp duty re-pricing is welcome and unexpected, as is the greater flexibility for pension funds. Many Contractors can benefit from these areas at some point. What is interesting is that the Chancellor has given away quite a lot on the face of it, but no doubt he will recoup a lot of this in due course via taxes in other areas.
“For example, someone who is drawing down their pension under the new rules doesn’t have to tie a lot of it up via an annuity, which will no doubt mean increased spending and therefore more revenue for the Treasury.
“Once the dust settles, it will be interesting to see how long it will be before the Chancellor and the Bank of England examine the role of interest rates in the economic recovery. They have to go up, and it is likely that this will happen shortly after the General Election in May.
“Any contractor who will benefit immediately from the Budget, would do well to ensure that they factor in future rate increases on their mortgages and other debts.”
Article By:Taj Kang, Business Development Director at Contractor Mortgages Made Easy
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