Earlier in the year and the week than usual, this year’s budget was announced for 29 October – a date that marks just five months until Britain is due to leave the European Union.
Hailed as the beginning of the end for austerity, Mr Hammond’s budget was the last before Brexit next year and included many announcements already made. We look at some of the items affecting Proplend Lenders and Borrowers starting with two of the bigger ones:
Business rate bills cut by one-third for the next two years for all retailers in England with a rateable value of £51,000 or less
- Based on its open market rental value in April 2015, multiplying by a figure set by central government
- Tax is worked out based on a property’s ‘rateable value’
- Delivering an annual saving of up to £8,000 for up to 90% of all independent shops, pubs, restaurants and cafes
- Almost 500,000 business should benefit from the cut
- Example: A business occupying a property with a ‘rateable’ value of £37,750 will save around £6,000-a-year
- Example: A corner shop with a rateable value of £14,250 will save £1,749, according to officials
Business rates are charged on most non-domestic properties such as shops, offices, pubs and warehouses. The tax is worked out based on a property’s ‘rateable value’. VAT registration threshold to remain unchanged for a further two years.
£675m ‘Future High Streets Fund’ for councils to revive their town centres and high streets.
The fund has two key aims:
- Supporting local areas to prepare long-term strategies for high streets and town centres (including funding a new High Streets Taskforce)
- Co-funding projects in local areas, involving Investment in land assembly, including to support the densification of residential and workspace around high streets in place of underused retail units.
Other highlights included:
- Private Residence Relief: From April 2020 this moves down from 18 months to just 9 months.
- CGT Lettings Relief: This will be transformed from April 2020 and will only apply where the owner is in shared occupancy with the tenant(s).
- New Structures and Building Allowance: Relief for eligible construction costs on new non-residential structures and buildings.
- Stamp Duty: Abolished for first time buyers of shared ownership schemes up to £500k.
- UK Digital Services Tax: From April 2020 the UK will introduce a tax on online platforms that are profitable and have a global turnover of more that £500m. Proplend remain unaffected, for now!
- Housing Infrastructure Fund: £500m to enable a further 650,000 homes to be built.
- SME House Builders: Guarantees of up to £1bn for smaller house builders.
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‘Real’ Investment Returns
2018 also marks 10 years of average UK inflation rates eclipsing UK bank interest rates and with no further incremental base rate increases expected before the middle of 2019, cash savings look set to effectively lose value for quite some time yet.
If you want to keep your money ahead of inflation, then investing in property-secured P2P loans might be for you. As with most investments, capital is at risk, as they are not covered by the Financial Services Compensation Scheme.
Tax-free returns are available by P2P lending via an Innovative ISA (IFISA), using either annual subscription allowances or transfers from existing ISAs to fund your investments. Got any Cash ISAs lying around paying less than 1%?
