Sunak, stamp duty and summer schools; the Budget 2021 and family law
Chancellor Rishi Sunak has delivered his Budget for 2021, which alongside the Roadmap to Recovery announced on 22 February, gives some clarity to the future for separated families, and couples wishing to divorce.
Furlough period extended
This is very welcome news for employed parents, ensuring that even if they cannot work, they can continue to pay the mortgage and look after their family. It is also important for separated and single parents who rely on Child Maintenance for part or all of their household income, as absent parents should be able to continue to pay this even if they are not working.
However, there are a couple of points to note. According to the Institute for Fiscal Studies (IFS), the hours worked by UK parents halved in May 2020 compared to 2014-15. The IFS attributed this “in part” by the increased childcare responsibilities imposed by school shutdowns and the extended need for home schooling.
The revised furlough scheme pays 80% of employees’ wages for “hours they cannot work”, not necessarily all hours. Also, the amount paid by the employers rises to 10% in July and 20% in August, so there may be more pressure for parents to return to work.
Summer schools for secondary children
This change in the furlough contributions by employers comes when school holidays normally start. This is relevant because the Budget includes education funding of £2billion, including money for schools in England to help children catch up on lost learning. The Chancellor announced £200 million for secondary schools to deliver face-to-face summer schools, and:
“Help ensure children have the opportunity to make up for lost learning and are able to progress and fulfil their potential.”
So, just at the point where employers may be asking employees to work more hours, single parents of secondary school children may have extra time as their children catch up at school, whilst parents of primary school children may have less time and/or need to find childcare. In either case, separated parents making child arrangements from the summer will need to take these new schooling provisions into consideration. Co-parenting in these circumstances is imperative.
Stamp duty and selling the family home
Many separating and divorcing couples were worried that they might have missed out on lower stamp duty when selling the family home as part of a divorce financial settlement. The Chancellor has extended the Stamp Duty holiday until 30 June, with no tax due on house sales under £500,000. After 30 June, stamp duty will start at £250,000 until the end of September, when it then returns to the starting level of £125,000.
So separating couples should seek to sell before 1 October 2021 to benefit. If other assets need to be sold in the financial settlement, the Chancellor announced that there would be no changes to the capital gains tax allowances.
This is a huge benefit for separating families. Not only does it help the sale of the former matrimonial home, but it also assists with repurchase costs. This helps those matrimonial assets spread further and helps rehousing.
Income tax and future financial settlements
The Chancellor announced that the personal allowances for income tax would be frozen until 2026, which in real terms probably means everyone will pay a little more tax. This is something that will need to be considered in any future financial planning and settlement discussions to understand the net effect reality.
Self-employed support extended
For many newly self-employed single parents, the pandemic has meant virtually zero income, as they were not eligible for the SEISS grants without a set of yearly accounts. This pushed many self-employed professionals into unexpected reliance on Universal Credit. The end of the 2020-21 tax year means that around 600,000 newly self-employed people who have submitted a tax return for the previous tax year are now eligible for an SEISS grant. This should help many parents who have become self-employed to support their childcare and family responsibilities.
Support for victims of domestic abuse
In perhaps one of the most welcome measures in the Budget, the Chancellor announced an additional £19 million towards tackling domestic abuse, including:
- £15 million in 2021-22 across England and Wales to increase funding for perpetrator programmes that work with offenders to reduce the risk of abuse continuing.
- £4 million between 2021-22 and 2022-23 to trial a network of ‘Respite Rooms’ across England to provide specialist support for homeless women facing severe disadvantage.
This is in addition to the £125 million announced in the Spending Review 2020 (SR20) enabling local authorities to adhere to the Domestic Abuse Bill’s statutory duty to support victims. SR20 also included support to help courts, including family courts, to clear the backlog of cases caused by the COVID restrictions.
Test and Trace Support Payments for single parents
Announced prior to the Budget on February 22, the Government has allocated a further £20 million per month for discretionary ‘self-isolation’ payments. These now cover parents who are unable to work because they are caring for a self-isolating child. For separated families who now have to rely on one income, this is a welcome relief.
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