Monday property news update - 22nd February 2021

Extending the SDLT holiday, taxing online retailers and employers grow bullish
Written By:
Liam Bailey, Knight Frank
3 minutes to read

Paying for support

With the chancellor expected to extend various Covid-19 support schemes in the budget next Wednesday, we're starting to see more concrete details as to the scope of any planned changes to taxation.

Detail in the Sunday Times suggests a rise in corporation tax will form a central plank of the announcements. The widely trailed plan to equalise rates of capital gains tax with taxpayers’ income tax bands appears to have been shelved, at least until Autumn. That's perhaps unsurprising given that - as we found in November - the change would have raised the total take from £10 billion to just £20 billion, or about two months' worth of furlough payments.

An extended holiday

The paper also reports that the stamp duty holiday will be extended in line with the other Covid-19 support measures, "but Treasury officials refused to confirm a decision that would move the markets."

In a new Property Market Outlook, Chris Druce takes a snap survey of more than 500 Knight Frank clients, of which 87% believe that the chancellor should extend the holiday. A quarter of respondents who believe the holiday should be extended suggested it should be tapered to afford extra time for buyers to complete.

Levelling the playing field

The overhaul of capital gains tax isn't the only proposal likely to be shelved until Autumn: we talked on Friday about reports a major review of business rates - set to level the playing field between the high street and online retailers - has also been delayed until later this year. There have been various measures floated aimed at achieving that goal, from tinkering with business rates to a blanket online tax, neither of which are likely to be as effective as other measures, says Stephen Springham:

"Rather than a blanket online tax, a tax based on deliveries (or a green tax) may ultimately be a more workable solution and would certainly bring consistency with wider ESG agendas. It potentially irons out nuances of what constitutes an online sale (if it’s delivered to your home it is and if it’s not, it isn’t) but it clearly needs considerable investigation before it is implemented.

"A move in this direction is unlikely to be announced in the forthcoming budget, but ultimately is probably where we should be headed longer-term."

The resilience of the UK economy

The economy continues to surprise on the upside despite the current lockdown.

The IHS Markit/CIPS purchasing managers index (PMI) jumped to 49.8 in February from 41.2 in January. Though any reading below 50 constitutes a contraction, that reading beat forecasts of a reading of 42.2.

The CBI Industrial Trends Survey also showed orders hitting a 12-month high. Output expectations for the next three months improved to a four-month high. You can see analysis from EY here.

The outlook for jobs brightens

Sentiment in the jobs market is also improving rapidly: British businesses now have the strongest hiring intentions in a year and fewer are planning to make redundancies.

The Chartered Institute of Personnel and Development said 56% of businesses planned to increase staff numbers in the coming months, up from 53% in late 2020. The proportion of firms planning redundancies dropped sharply to 20% from 30% in the last quarter.

That's confirmed by data from the Insolvency Service obtained by the BBC that shows some 292 British employers made plans to cut jobs in January, the lowest figure since the pandemic began.

In other news...

In a new Rural Market Update, Andrew Shirley considers the future of environmental support for farmers and landowners.

Plus, mortgage hope for first-time buyers, big pension fund bets UK still a draw for overseas students, John Lewis to close more stores, BoE faces tension over stimulus options if recovery disappoints, Hong Kong’s home sales jump to eight-year high, and finally, about 1,000 finance firms are eyeing post-Brexit outposts in the UK.