What taxes could Rishi Sunak bring in?
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What taxes could Rishi Sunak bring in?
There have been talks of tax increases over the past few weeks, and with the damage of the pandemic it’s almost inevitable. The most likely areas in which there will be changes are –
1) Capital Gains Tax
2) Inheritance tax
3) Income tax
4) Main Residence Relief
5) National Insurance.
Homeowners have seen a huge amount of change this year, from the halt in the property market during the first lockdown to the stamp duty holiday introduced to encourage homeowners to buy and sell before March 2021. However, there is now talk of an increase in property tax and a drop in house prices since the last Spending Review, causing homeowners concern. We Buy Any House are here to give you the answers that you need.
Why is there talk of the property taxes rising?
In the last Spending Review, there was an outline of a plan that will be put into place to support struggling workers, especially with the unemployment numbers expected to increase dramatically when furlough ends in March. The Chancellor announced a restart scheme, which was said to offer £3billion to provide help to those in need. While this scheme comes as a comfort to those who were concerned about where they will stand next year, for others it has raised more questions – the main one being, where will this £3billion come from?
With more than just the restart scheme, the Treasury has outlined plans to generate as much as £20billion from increasing taxes, to then use this money to fund those who need it most as the pandemic is still affecting much of the world. The expectation is that in the Spring budget, taxes will be raised in order to finance these changes.
Which taxes are likely to be increased?
There have been suspicions of Capital Gains Taxes being increased since before the pandemic, and so now the expectation is that this will happen in the Spring Review. Currently, the standard Capital Gains Tax on gains for assets other than property is 20%, and there have been recommendations to increase this to 28%, which is the charge on property assets. There is a chance that the percentage will also be pushed up, with the allowance threshold being dramatically reduced to maximise it.
There have also been talks of inheritance tax being changed, as there are several ways to work around this tax currently, meaning this tax doesn’t have the same impact as other taxes, so it’s expected that this tax will be reformed.
Income tax is arguably the tax most people think will be affected by potential increases and is one of the easiest and most widely accepted tax change. There are a few changes that are likely to be implemented if income tax is increased, such as the basic income tax going up to 21%, and the higher tax bracket moving to 50%.
Main residence relief is also on the consideration list to change. Main residence relief allows homeowners to sell their main home and make tax-free capital gains. Currently, there is no firm answer to what will happen to this relief, but homeowners are concerned that it could be scrapped altogether.
National insurance is also on the list, affecting the self-employed if the self-employed tax benefits are removed.
When will the taxes raise?
These changes are expected to be announced in the Spring Review, and with the expectations that the economy will fall by 11.3% and not recover until the end of 2022, some sort of tax increase is inevitable. While these tax increases have been delayed in the recent spending review, it has been said that increases in 2021 are unavoidable, so, for now, it’s just a case of seeing which taxes are increased and how it affects the public.
Will these taxes affect me?
Depending on which taxes are increased, it could affect almost all of us. There were promises put in place during the election that PM Boris Johnson wouldn’t increase income tax, national insurance, or VAT, but the pandemic has meant that these kinds of promises can’t be kept. For now, there are no promises of which taxes will be affected and how dramatically, and so we’ll need to wait for the announcement in the Spring Review, but it’s safe to assume at least some of these taxes will be changed. Until we know the extent of the changes, it’s difficult to say what the effect will be.
Will these taxes affect me buying or selling houses?
Currently, anyone looking to buy or sell property is benefitting from the stamp duty holiday which has been saving homeowners up to £15,000. This is set to end in March 2021, and the introduction of these tax changes will mean that anyone looking to buy or sell could need to reconsider their finances. Even before the announcements were made that there is a risk of tax increases coming, homeowners who were looking to sell in the next year or two were changing their plans to make the most of the stamp duty holiday. Now this announcement has come out, even more homeowners are keen to get moving on their sale or their purchase, to avoid the potential repercussions that could come with a tax increase, and to make sure they don’t miss out on this stamp duty holiday to maximise the deal that they’re getting with their property.
Should I sell now?
If you’ve been thinking about selling in the next year or so, now is the perfect time to act. The stamp duty holiday will be ending in just over 3 months, and with the tax increase expected to come into place around the same time, homeowners are now more than ever keen to get ahead of it and avoid any results of the changes.
For some, selling before Christmas seems impossible, but we’re here to help. With We Buy Any House, you can achieve your sale in as little as 7 days, letting you sell quickly and hassle-free. If you’re keen to sell before the end of the stamp duty holiday and before tax changes come into place that could mean you lose money on your sale, get in touch for your free cash offer today!
How do I sell my house fast?
No matter why you’re looking to sell your house, if you can do it in a faster and easier way than the traditional house sale, why wouldn’t you? We Buy Any House can offer you exactly that – a quick, hassle-free sale that relieves you from the stresses of the property market and lets you focus on the other things that are important in your life. Get in touch with us today for your free cash offer and see how quickly you can sell!Back to all articles
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