The budget announced yesterday was one that “backed business” and could have a significant impact in the property and construction sectors. Below are a number of announcements that may affect you and your business.
Arguably, the most significant announcements were the government’s vast ranging tax changes:
First and foremost, Stamp duty land tax (SDLT) will:
- be reintroduced for first-time buyers at a rate of 1% on properties costing between £125,000 and £250,000, as from 24th March 2012.
- increase to 7% on the sale of residential properties over £2 million as from 22nd March 2012.
- be levied at 15% on residential properties valued at over £2 million purchased by non-natural persons such as companies, as of 22nd March. This could even be extended by an annual charge on such properties as from April 2013.
Pending a government consultation, Capital gains tax will also be payable on any disposals by non-natural persons such as companies of properties over £2 million as from April 2013.
It is clear that the government are clamping down on schemes that allow for tax avoidance with effect immediately.
As regards corporation tax, this is set to be reduced to 24% by April 2012, then to 23% in April 2013 and finally to 22% in April 2014.
Regarding development funding, the 2012 budget announced that:
The Get Britain Building Fund (which has already received a £420 million cash injection for developers to build 12,000 new homes) will receive a further £150 million, which will help to deliver a further 3,000 homes.
The NewBuy scheme (intended to boost housing supply and provide access to mortgages for those who do not have sizeable deposits) will be governed by strict criteria, including a requirement that the property be a new build with a sale price not exceeding £500,000. Also, other properties will be excluded, including second homes, buy-to-let properties and those that are shared ownership or shared equity purchases.
Sustainable development is the order of the day with regards to planning, which was said to underpin all local plans and decisions. It was announced in the budget that there will be further measures to simplify and deregulate the planning system, paving the way for future development.
The government has already published its vision of the future for infrastructure improvements in the UK via the National Infrastructure Plans of 2010 and 2011 (NIP 2010 and NIP 2011).
It was announced that the government will continue their active role in ensuring that NIP 2011 is delivered timely and efficiently. This will result in greater support for infrastructure improvements in both the North and London.
Amongst these announcements, it was confirmed that Network Rail will be supported to invest £130 million in the Northern Hub rail scheme, which will improve train services between Manchester and a number of towns and cities.
In addition, a number of cities will become “super-connected” as part of a £100 million investment in delivering ultrafast broadband to 1.7 million households and 200,000 businesses.
It is clear that there is to be a strengthening of Britain’s competitiveness and business efficiency. In turn, it is hoped the announcements will have a positive impact on the growth and sustainability of the property and construction sectors going forward.
Only time will tell.Find out more about our Commercial Property department