Fiscal Policy & Economic Backdrop
Spring 2016

Those hoping larger scale investors would be excluded from stamp duty obligations were disappointed, with the Chancellor’s budget confirming the additional 3% will be payable on all investment and second home purchases. Mischon de Reya reported that whilst the Government confirmed continued reforms, the rules to the non-dom tax regime will be introduced in April 2017, limited further detail was provided. Most importantly all UK residential properties held through an offshore structure will be within the scope of inheritance tax. The Government have also said they will change the taxation of offshore trust.

The Consumer Price Index (CPI) rose by 0.5% in the year to March 2016, although this was driven by increases to air fares as a result of the Easter holiday weekend being early. The Retail Price Index (RPI) increased by 1.6% in the year to March, up from 1.3% in February. This figure includes housing costs. Despite the CPI being well below the 2% target set by the Bank of England, most economists do not expect an interest rate rise until at least 2017, with many predicting it will take longer. In February the Bank’s monetary policy committee voted unanimously to maintain rates at 0.5%.

• Bank of England Inflation Report, February 2016
• ONS Consumer Price Inflation, March 2016