The UK’s Chancellor of the Exchequer, Rishi Sunak, has presented his Summer Economic Statement, a de facto budget, and this article is an overview of the main points with particular reference to any announcements or changes that are relevant to those living out of the UK.
UK Stamp Duty
With immediate effect, until 31st March 2021, buyers in England and Northern Ireland will not pay Stamp Duty on the first £500,000 when they buy a property. It is estimated that this will benefit nearly 90% of buyers.
As announced in March of this year, there will be a Non-UK resident Stamp Duty Land Tax (SDLT) surcharge of 2% on any non-UK residents purchasing residential property in England and Northern Ireland from 1 April 2021 and this is unchanged.
This makes it beneficial to buy UK property sooner rather than later and if this is of interest, I can assist with some great property investments that can be accessed without leaving the UAE. See HERE for a recent article and there will be more to follow.
VAT cuts for the hospitality industry
The rate of VAT on tourism and hospitality related activities will be cut from the standard rate of 20% to just 5% for a period of six months.
This is a sector that has been very badly affected by the UK restrictions, with some 80% of firms in the hospitality sector not trading in April and 1.4 million employees furloughed, the highest of any sector. This is a scheme to kickstart spending which will, in turn, support jobs and businesses. Clearly the thinking is that if retail prices are lower, people are more likely to go to restaurants, stay in hotels, visit theme parks and so on.
While this does not directly affect those of us resident in the UAE, many will travel to the UK in the next six months and will have friends and family working in this sector.
Other points include:
- Grants of up to £2 billion for green home improvements, the Green Homes Grant scheme.
- £1 billion programme to make public buildings, including schools and hospitals greener.
- £1.5 billion for hospital maintenance and upgrades
- Over £1 billion to start to rebuild schools in the worst condition in England, plus £760 million this year for key maintenance work on schools and further education colleges
- A Job Retention Bonus will be introduced to help firms keep furloughed workers. UK Employers will receive a one-off bonus of £1,000 for each furloughed employee who is still employed as of 31 January 2021.
- Eat Out to Help Out discount scheme will provide a 50% reduction (max £10) for sit-down meals in cafes, restaurants and pubs across the UK from Monday to Wednesday every week throughout August 2020.
I have read through the summary, (just 33 page this time) and there is nothing else specifically related to taxing expats. A full Budget and Spending Review is expected in the Autumn.
Without being political, the UK has suffered economically during the COVID-10 shut downs and the concept behind this budget seems to be to get people spending, to get the economy moving and to try and support jobs. Quite where all the money to fund the schemes and furlough costs will come from is unclear but for now the focus is on supporting some of the worst hit sectors of the economy. The UK’s budget deficit will be larger than it has been since the 1940s but low interest rates has made Government borrowing easier and cheaper. For now, the main issue is to support the UK economy.
I write articles such as this one as part of the holistic personal financial planning service and that I provide to expats, and the general consumer, financial and legal information that I provide in The National newspaper, on Capital Radio UAE, and on the Facebook group British Expats Dubai.
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