The ‘rabbit in the hat’ from the Government’s November 2015 Autumn Statement and Spending Review was the abolition of the proposed changes to child tax credit. Many families feared their household income would drop by up to £1,200 per annum as a result, but this will not now occur. The Government still intends to make £12 billion of welfare savings, but aside from restrictions on pension credit and housing benefit for those who move abroad for longer than one month, specific details have not been provided of where these cuts will be made.
The Government’s commitment to provide 30 hours of free childcare each week to parents of three and four year olds will now be restricted to parents who work for more than 16 hours per week and who earn less than £100,000 per year.
Individuals hoping that their employer will make additional contributions to their pension savings will now have to wait a further six months. The dates at which the mandatory employer contributions to workplace pensions will rise to 2% and 3% of salary have been delayed until April 2018 and April 2019 respectively. However, the staging dates – the dates from which employers are obliged to provide a contributory pension scheme – remain unaltered. From April 2016, the basic state pension will rise by £3.35 a week to £119.30 – the highest real terms increase in 15 years.
Prospective buyers of second homes were badly hit by the announcement that individuals will need to pay an additional 3% in stamp duty on these purchases from April next year. This measure could massively affect the buy-to-let market.
The measures aimed at curbing the rental market are related to a series of new announcements aimed at making it easier to purchase a home. The existing Help To Buy scheme allows first time buyers and those moving home to obtain a Government-backed loan for up to 20% of the purchase price. Now a new London Help To Buy scheme is to be launched, where the loan can be obtained for up to 40% of the price. The need to provide 5% as a deposit remains, so buyers will only need to cover 55% of the price via a traditional mortgage.
First time buyers will be able to obtain a 20% discount on the purchase price of one of the 200,000 Starter Homes that the Government has pledged to build. This scheme is available to first time buyers under the age of 40 where the discounted purchase price is less than £250,000 (£450,000 in London).
The Right To Buy scheme, that has applied to council tenants for many years, will be extended to housing association tenants from April 2016, allowing them to purchase their rental property at a discount.
The requirement for local authorities to hold a referendum before increasing council tax has been watered down. Now, council tax payers could see their bill rise by up to 2% without a referendum being called, provided that their local council agrees to spend the additional funds on social care.
The new Apprenticeships Levy was confirmed at 0.5% of an employer’s total wage bill. Only firms with a wage bill of £3 million or above will be required to contribute in this way to the funding of apprenticeship schemes.
The information shown in this article was correct at the time of publication. Articles are not routinely reviewed and as such are not updated. Please be aware the facts, circumstances or legal position may change after publication of the article.