Firms across the industry have backed many of the 2021 Budget announcements, including a £100m war chest for HMRC to tackle fraud and other measures to continue the housing market’s recovery.
One of the key announcements in a Budget that will see government spending rise by another £65bn to more than £400bn, was a £100m investment in a HMRC Taxpayer Protection Taskforce to tackle fraudsters that claimed furlough payments and pilfered other government schemes.
John Dobson, chief executive at anti-money laundering specialists SmartSearch, said: “This is a positive announcement and more than 1,000 new investigators may go some way to recouping the billions which have been lost to fraud over the past 12 months.
“There’s no doubt that extra resources are much in need, particularly as the chancellor has also announced a new fund for businesses to replace the Bounce Back loans, which was wide open to fraud.”
Dobson explained it is vital that a significant amount of the £100m investment goes into the systems used by HMRC to find those responsible for fraud. “Without the use of the latest digital platforms to run ID checks and verify information on a global scale, these investigators will be in danger of just becoming busy fools,” he added.
Stamp duty extension and mortgage guarantees
Many in the mortgage market welcomed the stamp duty extension until the end of June, and the re-introduction of 95% LTV products from next month, as a boon for first-time buyers to get onto the housing ladder, but with caveats.
The 95% LTV mortgages will be enabled and enticed back to the market by the chancellor’s mortgage guarantee scheme, designed to increase the appetite of lenders for high loan-to-value lending to creditworthy customers.
It will provide lenders with the option to purchase a government guarantee that compensates them for a portion of their losses, in the event of foreclosure, on 95% mortgages. The government will charge a commercial fee for the provision of this guarantee.
Lloyds Banking Group, NatWest, Santander, Barclays and HSBC will all be offering the scheme at its launch, as will Virgin Money soon after.
Keith Richards, chief executive of the Personal Finance Society, said: “The extension of the stamp duty holiday and mortgage guarantee scheme to help first-time buyers and current homeowners with just five percent deposits to buy properties worth up to £600,000, are welcome short-term fixes.”
But to truly turn generation rent into generation buy, he added, long-term action is needed including more affordable housing.
Mark Snape, chief executive of Broker Conveyancing, said: “On the stamp duty extension, my preference would have been for the March deadline to stay but with a taper in place for those in the process now.
“This could have provided much-needed normality for the market, although the chancellor’s announcement seems like a fair alternative. The unexpected post-June taper seems well-timed and well-considered taking the market away from the end of June cliff edge.
“This should provide our law firms with some much-needed breathing space, although this depends on how many are drawn into the market on the back of this announcement, plus the greater availability of higher LTV mortgages.”
A new business loan programme
To replace the bounce back loans scheme, the chancellor announced that UK businesses of any size will be able to apply for the new Loan Recovery Scheme, which offers a loan or overdraft between £25,000 and £10m until the end of 2021. Asset and invoice finance funds of between £1,000 and £10m will also be available.
These will carry a government guarantee of 80%, and eligibility so far, states that businesses must be trading in the UK, viable would it not be for the pandemic or impacted by the pandemic, and not subject to insolvency proceedings. Those who’ve used bounce back loans will also be eligible.
New contactless limits
UK Finance welcomed the new flexibility to increase the contactless limit to £100, adding: “This could not have been achieved whilst still in the EU so is a true Brexit dividend. We will work closely with the payments sector and retailers ahead of increasing the limit later this year.”
Capital allowance scheme
Stephen Haddrill, director general of the Finance & Leasing Association, noted that the super deduction capital allowance scheme will include plant and machinery acquired on asset finance. He explained this will be an extremely useful measure as leasing and hire purchase are the products of choice for more than a third of the UK’s total investment in equipment, plant and machinery and purchased software.