Good news for higher (and lower) rate taxpayers. Will you spend, save or invest?
This year’s Budget has been a mixed bag. Although the Budget means the spotlight is firmly on Mr Hammond, the entire Government is under scrutiny to deliver a financial strategy that works for all.
Public services are under pressure, productivity needs to increase to ensure economic growth, and austerity measures put in place a few years ago are still taking their toll.
In the 2017 Budget the Chancellor has tried to address all of this and has certainly given with one hand, although inevitably there has also been an element of taking with the other hand.
Combined with recent changes to interest rates (which, incidentally, are possibly more interesting than you think – check out our potted history of interest rates) this year’s Budget is definitely worth looking at if you are a saver or an investor.
Two key changes, in particular, affect those of you investing on the Crowdstacker platform, and they are both potentially positive. So let’s take a closer look.
How you can help ‘Help to Buy’
Providing more affordable housing and creating enough homes to replace inadequate housing and a growing population were the stand out issues tackled in the Budget.
Phillip Hammond announced that stamp duty would be scrapped for first time buyers for homes with a value of up to £300,000. And for first time buyers purchasing in London it would be waived on the first £300,000 of any purchase up to £500,000. Undoubtedly a helpful measure for those starting out on the housing ladder.
Other measures instituted to help meet the need for 300,000 new homes every year in Britain were £44bn support for the construction industry to create and develop a more skilled workforce. Mr Hammond also made changes aimed at helping housing developments get off the ground including compulsory purchase rights for local government, a review into delays for permitted development and a 100% council tax premium on empty properties.
This comes on top of Theresa May’s promise in October to make available an extra £10bn towards Help to Buy equity loans.
All of this should provide benefits to British construction businesses, including current Crowdstacker investment, St Mark Homes. And it provides a helping hand to younger people as they get on or move up the housing ladder.
Earlier this month St Mark Homes which is currently seeking to raise £3million on the Crowdstacker platform, announced it is nearly doubling (increasing by 75 per cent) its construction forecasts to do its bit towards meeting the country’s housing targets.
Investors’ money will play a significant role in this as it is deployed to build residential developments to include flats and houses. The target is for 70 per cent of these to be eligible for the Help to Buy scheme.
And the good news for investors is that it is offering 6 per cent returns over 30 months, and the minimum investment is £500.
Plus, it is eligible to be held in an ISA so earnings would be tax free. . Fewer cash ISAs were opened in the last tax year as savers and investors looked for more lucrative investments. You can find out more about the Crowdstacker Innovative ISA account and the excellent rates of returns it offers here.
Turn tax changes into even more money in your pocket
Tax bands have changed at both the lower and upper ends - so workers may potentially have a little bit extra at the end of each month.
The lower band will rise to £11,850 from £11,500 in April 2018 – meaning an extra £350 can be earned per year tax-free. The current rate of tax at that level is 20 per cent, so in real terms, this means an extra £70 a year take home pay. A small amount, but potentially helpful.
At the higher end the threshold for higher rate tax will rise at the same time from £45,000 to £46,350, which is taxed at 40 per cent. Meaning higher rate taxpayers could take home up to £610 extra per year.
For some this might slightly ease financial situations meaning debts can be paid down a little or living costs made slightly easier to bear. For others, this could mean having a little extra money that can be used to buy small luxuries, or it could be saved and invested.
If you saved £610 on your income tax as a result of the Budget changes, and invested it in one of Crowdstacker’s current investments such as St Mark Homes, Rivers Leasing, or Authentic Alehouses you could earn around 6.5 per cent gross interest per annum.
And if you hold it in our Innovative Finance ISA all of this could be earned tax free.
A good time to save and invest?
Crowdstacker offers investment opportunities with British businesses that we feel offer quality, as well as higher rates of return than you can expect from some other types of investment. Plus they offer investors the opportunity to diversify.
If you’ve benefitted from the Budget announcements in any way, small or big, it is worth taking some time to think through how to use this windfall to best advantage.