Spring Budget 2020
What it means for you
Read more about what’s been announced in the Budget 2020 and how it may affect you and your finances.
The Chancellor has revealed changes to pension rules, National Insurance contributions and measures to support people affected by coronavirus.
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The Chancellor announced some changes which may help more people onto the property ladder.
There will be a total of £12.2bn in grant funding for the Affordable Homes Programme (of which £9.5bn is newly announced), which supports the building of affordable new homes across England by private housebuilders. This could boost the number of shared ownership properties available to first-time buyers in the coming years.
Meanwhile, the government will introduce a 2% stamp duty surcharge for non-UK residents purchasing residential property in England and Northern Ireland from 1 April 2021. Home buyers pay a different tax if property or land is in Scotland or Wales.
Stamp Duty Land Tax (SDLT) applies when you buy a property over the current threshold of £125,000 in England and Northern Ireland. However, first-time buyers do not pay stamp duty on the first £300,000 of a property’s value, on properties worth up to £500,000. There is also an additional 3% surcharge on stamp duty rates for those who own more than one property, such as landlords.
Before the Budget, the Bank of England cut the Base Rate from 0.75% to 0.25% to provide support for the economy amid concerns about the impact of coronavirus.
This move could affect the interest rates on new or existing mortgages, potentially reducing the cost of repayments. Our rates may rise and fall in line with the Bank of England Base Rate, although this isn’t guaranteed.
To encourage drivers to switch to more energy-efficient vehicles, the Chancellor has announced investment in electric vehicle charging infrastructure. The move aims to ensure that drivers are never more than 30 miles from a rapid charging station. The government is also providing £532m for consumer incentives for ultra-low emission vehicles, including a grant worth up to £3,000 for those making the move to electric cars.
Nicholas Lyes, the RAC’s head of policy, says: “Our research suggests that cost is one of the biggest barriers for drivers who want to switch to an electric vehicle and the steps taken today provide clarity and certainty for both consumers and manufacturers.”1
Fuel duty is being frozen for the tenth year in a row. Currently, it’s set at 57.95p per litre, with 20% VAT added. The government is also freezing all duties on alcohol, meaning that a pint of beer is 1p cheaper than it would have been if it had risen with inflation.
Tax rules can change in future and their effects depend on individual circumstances. We don’t offer individual tax advice. If you’re unsure of how tax rules affect you, you should seek independent advice.
If you’re earning more than £110,000, you may be able to save more into a pension each year following changes made to pension rules by the Chancellor. The rules are complicated, and the changes will come into effect in April 2020.
Currently, if you have a threshold income above £110,000 (or an adjusted income of £150,000, a technical definition which includes employer pension contributions), the amount you can save into a pension each year is restricted. Your annual allowance can be reduced from £40,000 to a minimum of £10,000, depending on how much you earn above the threshold.
The Chancellor has announced that the income level that triggers this reduction in the annual allowance will be increased to £200,000 (or £240,000 in adjusted income) from 6 April this year.
The changes effectively mean that those earning below £200,000 are now unlikely to be affected by the annual allowance rules.
The minimum level that the taper reduces to will also be lowered from £10,000 to £4,000 in April. It means that those on an adjusted income of over £312,000 a year may only be able to pay £4,000 into a pension annually.
Patricia Mock, tax director at Deloitte, a consultancy firm, said: “Whilst this might be seen as a minor change in some respects, its application is important for those affected.”2
Planning to retire soon? Learn more about your options at retirement.
Barclays does not provide financial, legal or tax advice. Accordingly, nothing contained within this article should be construed as constituting legal, financial or tax advice. Tax rules and legislation can change, and the benefits and drawbacks of a particular tax treatment will vary with individual circumstances. We recommend that you take professional advice where required. You have sole responsibility for the management of your respective tax, financial and legal affairs, including making any applicable filings and payments and complying with any applicable laws and regulations.