Key takeaways from HK Budget Speech 2024

Hong Kong is on its recovery path after pandemic control measures. The economy continues to confront substantial challenges. 

Against this backdrop, Hong Kong’s Finance Secretary, Mr. Paul Chan Mo-po delivered the 2024/25 Budget Speech on February 28. Endowus is here to help you navigate these complexities. We have summarised the key points and will provide a detailed breakdown of its impact on personal wealth planning.

Tax relief, rates concession and other measures

This year's budget sweeteners add up to HK$11.5 billion, down 80 per cent from a year ago. 

The part that grasped the most attention was the reduced assistance to taxpayers. For the year of assessment 2023/24, salaries tax and tax under personal assessment as well as profits tax will be reduced by 100 per cent, subject to a ceiling of $3,000.

The government announced a rates concession for domestic and non-domestic properties for the first quarter of 2024/25, subject to a ceiling of $1,000 for each rateable property. 

Recipients of social security benefits, including the Comprehensive Social Security Assistance, Old Age Allowance, Old Age Living Allowance, Disability Allowance and Working Family Allowance will receive an allowance equal to half the standard monthly rate of their benefits. The same arrangement was offered last year. 

When faced with increasing tax pressure and rising living costs, we should proactively prepare for both the present and the future. Having a liquid source of capital can help us handle unforeseen emergencies. This can be started by formulating a comprehensive long-term financial plan tailored to your own personal financial conditions and wealth objectives. Additionally, managing emergency funds in the short term is equally important. 

Emergency funds are specifically intended to address unexpected situations. Life is all about unknowns–sudden illness, unemployment, repairs, business setbacks, or unforeseen circumstances involving friends and family that require urgent financial assistance. Hence, establishing and effectively managing emergency funds are vital aspects of personal finance. 

The Fund Smart platform offers money market funds, which can be considered for managing short-term liquidity. By investing your idle funds in CashUp model portfolio, which comprises strategies managed by multiple fund managers, you can effectively minimise risks.  While money market funds are generally considered relatively low risk,  they do not guarantee capital preservation.

Scrapping all property cooling measures

All restrictions on Hong Kong property sales were scrapped. Effective immediately, all residential transactions are exempt from Special Stamp Duty (SSD), Buyer's Stamp Duty(BSD), and New Residential Stamp Duty(NRSD). This comes four mouths after the government relaxed some property cooling measures, which included stamp duties paid by non-locals, companies and homebuyers who were not first-time buyers. 

In Budget 2024, the removal of the decade-old property cooling measures included:

1. Buyer’s Stamp Duty, designed to target non-permanent residents,
2. New Residential Stamp Duty for second-time purchasers
3. Special Stamp Duty aimed at homeowners who resold their property within two years.  

Additionally, the Hong Kong Monetary Authority has also relaxed its regulatory policies on property mortgage loans requirements for homebuyers, properties for rent and offices. This includes the suspension of the stress testing requirement for property mortgage lending that assumes a 200-basis-point rise in the mortgage rate.

Residential real estate has long been a popular tool for generating passive income, primarily through rental income. The recent removal of various stamp duties has the potential to attract investors back into the property market, which has been sluggish in recent times. However, it is crucial for investors to exercise prudence and foresight by planning ahead before making significant decisions, such as purchasing a home, expanding their family, or preparing for retirement.

When it comes to real estate investments, which often require a substantial initial capital outlay, it is imperative not to be swayed solely by policy changes but rather to base investment decisions on thorough research and analysis. 

For prospective first-time homebuyers, it is likely that you are still in the process of accumulating your initial savings and down payment. Understanding how to effectively plan around your financial goals will be an essential step to eventually afford your dream home. 

The power of compounding can play a significant role in helping you achieve your wealth goals. By starting early, you can harness the full potential of compounding, reducing the time required to reach your objectives. However, you should also maintain discipline and stay invested with lower investing costs. Over time, compounding will magnify the growth of your capital and accumulate gains over time.

Read more：The power of compounding interest explained

Attracting more family offices and high net worth individuals (HNWI)

The upcoming Capital Investment Entrant Scheme (new CIES) will soon be accepting applications. Eligible investors who invest HK$27 million or more in qualifying assets and allocate HK$3 million to a new CIES Investment Portfolio will have the opportunity to apply for residency in Hong Kong. 

The new initiative aims to strengthen the competitive edge of Hong Kong's asset and wealth management sectors and promote the growth of the innovative technology industry. This plan will contribute to the overall development of these sectors and their related professional fields.

The measures also include tax relief for qualifying transactions conducted by single-family offices and simplifies the assessment procedures for professional investors. 

As an important offshore global wealth management hub, Hong Kong offers a vast capital market and a comprehensive service network that effectively supports the business expansion of family offices and high-net-worth individuals. Endowus Investment Office is led by Hugh Chung, Chief Investment Advisory Officer, who has extensive experience in family offices and is committed to delivering high-quality services to numerous family offices. Reach out to Endowus Private Wealth to explore exclusive products and receive personalised portfolio advisory services.

Read more：What is a family office? Why set up one and how it works

Assisting Small and Medium Enterprises (SMEs)

To assist SMEs with their cash flow, the Hong Kong government will extend the application period for the 80% and 90% Guarantee Products under the SME Financing Guarantee Scheme for two years to the end of March 2026. The total guaranteed commitment under the Scheme will increase further by $10 billion.

Profits-tax payers will now be eligible for tax deductions on expenses incurred to restore leased premises to their original condition. Additionally, the time limit for claiming allowances on industrial buildings and structures, as well as commercial buildings and structures, will be eliminated.

Endowus fully comprehends the challenges that SMEs face in their survival and growth. Similar to individual investors, SMEs need to ensure adequate cash flow and strive for maximum returns while managing risks, to offset miscellaneous expenses and the incremental rise in rents. The Endowus CashUp model portfolio may assist you in achieving an annual interest rate exceeding 5% under relatively low risk. Additionally, our dedicated team is on hand to plan, rebalance, and monitor investment portfolios, providing you with a hassle-free investment experience.

Read more：SMEs in Hong Kong: How to seek higher yields on corporate cash

Prudent wealth planning to navigate challenges

Logging a deficit with the shortfall ballooning to a hundred billion in the most recent year, the Hong Kong government has decided to tighten. As expected, the Budget has trimmed down on relief measures, with tax reductions rather modest compared to previous years. With an unclear economic outlook, we have to stay ahead and plan our investment in line with our various life plans and goals to generate reasonable income and support ourselves and the ones we love.

Through Endowus, you can easily build a diversified, long-term, and flexible investment portfolio using a core-satellite investment strategy. If you're unsure where to start with the myriad of funds available, Endowus offers several model portfolios, which are carefully curated by experienced financial experts and allow you to manage your investment plans with ease and at a low cost, much like the world's top investors.

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