Fiscal Policy & Economic Backdrop
Spring 2019

The government consultation on a proposed 1% surcharge on Stamp Duty Land Tax for non-UK residents, those who have spent less than six of the last 12 months living in the UK and non-IL based companies, partnerships and trusts, will close on 6th May 2019. The consultation is at the lower end of the 1-3% originally mooted in the November 2018 budget, and if accepted would increase the tax liability for an overseas second home buyer of a £2 million London property from £213,750 to £233,750. This equates to just under 12% of purchase price.

In a separate consultation, open until 6th June, the government is seeking views on the EU’s Fifth Money Laundering Directive which would require high-end lettings agents dealing with rental deals of €10,000 per month or more to undertake due diligence on prospective tenants.

The UK economy grew at a faster rate than expected in the three months to the end of February, registering growth of 0.3% according to the ONS. Month on month, the economy grew by 0.2%, whereas economists had expected it to remain static.

Government borrowing also fell to its lowest level in seventeen years. The ONS report that borrowing in 2018-2019 was equivalent to 1.2% of GDP, down from 10% at the height of the financial crisis. UK employment stands at its highest rate since records began in 1971, with growth in wages continuing to outpace inflation; positive news for household finances. The value of sterling against both the Euro and US$ has strengthened, up 4.0% and 2.6% respectively since the start of the year.