The Chancellor, George Osborne, has announced the 2015 Budget, with a number of policies set to impact the UK’s property investment market.
Commenting on the state of the UK economy, Mr Osborne reported that the UK grew by 2.6% in 2014, making it the fastest growth of any advanced world economy, but also falling short of the 3% growth that had previously been predicted in December.
Based on these figures, the growth forecast has also been updated. Increasing from December’s prediction of 2.4%, the Chancellor now anticipates growth of the UK economy in 2015 to reach 2.5%, with the subsequent three years seeing a 2.3% increase, before a 2.4% rise in 2019.
One of the Budget’s biggest surprises emerged when Mr Osborne announced changes to pension freedoms. As of April 6th, pensioners will now be able to trade their annuities for cash pots, with abolition of the 555 tax charge and the application of tax at a marginal rate.
The changes are expected to have an impact on the property investment market. With the UK buy-to-let market enjoying a period of strong growth, it is anticipated that the new freedom for pensioners will lead many to turn to property investment as a supplementary income stream.
Meanwhile, personal tax-free allowances will rise from £10,600 in 2015-16 to £10,800 in 2016-17. This is set to be followed by a further increase in 2017-18 to a total of £11,000. The 40p income tax threshold is also set to rise by above inflation from £42,385 to £43,300 in 2017-18. The changes are set to offer potential property investment purchasers more capital to play with in the property market.
The Chancellor also announced the “Help to Buy” ISA, a personal savings account for first time buyers that means £50 will be added by the government for every £200 saved for a deposit.