Chancellor Philip Hammond’s 2017 Autumn Budget is 7,910 words long. We know that most of us don’t have time to read a 32 page policy, so we’ve distilled it down to the main highlights. We have also unpacked some of the consequences of any changes, to help you figure out the impact without having to do all the analysis.
Autumn Budget 2017: The Highlights
Tax
- Personal Allowance increasing to £11,850 ( this is also known as the tax free personal allowance and is the amount you can earn before paying any income tax). All income tax payers, will get a tax break worth in the region of £70 and an additional £270 for Higher Rate taxpayers.
- Higher Rate Income Tax threshold is going up to £46,350. This saves the government money on the pension top-ups of taxpayers that are moved out of this bracket. It benefits taxpayers in the top 13% of this tax bracket.
- For the next two years, the VAT threshold for small businesses remains a consistent £85,000.
- Income tax will be applicable to ‘digital economy’ royalties earned on sales in the UK. This is part of HMRC’s tax avoidance measures and is predicted to rake in £200m annually. Another part of the government’s aim to reduce tax avoidance, evasion and fraud is, “making all online marketplaces jointly liable for VAT. Ensuring that sellers operating through them pay the right amount of VAT.”
- In an attempt to boost investment in North sea gas and oil production, “innovative” tax breaks will be introduced.
- R&D investment increased by £2.3billion. Make sure that you don’t miss out on your piece of the pie for past and future research and development projects.
Wages
National Living Wage is going up by 33p, from and hourly rate of £7.50 to £7.83 for workers over the age of 25.
Property and Construction
- Stamp Duty for first time buyers has been removed on properties valued at £300,000 or under in Enlgand, Wales and Norther Ireland (Scotland set their own rates). Initially, this sounds like a great idea and the maximum of £5,000 saving is substantial. But when you dig a bit deeper, it isn’t going to help as many home buyers as it might appear at first. For example, your location within the UK has a massive impact on how much you could save. Halifax’s ‘First Time Buyer Review’ from last year shows that, of all the first homes sold last year, only 74% were under £250,000. The cheaper the property where you live, the less you can benefit from this change in Stamp Duty. An even bigger concern, raised by the Office of Budget Responsibility, is that it may contribute to a general rise in house prices.
It does not tackle the enormous problem of first time buyers having to save for an ever-increasing deposit. Given that so many ordinary taxpayers’ budgets cannot stretch to include saving at all, it is unfathomable how they are expected to reach the UK average of £32, 321. There is no provision in this Budget to tackle this issue.
- Landlords could end up with some kind of incentive if they provide longer tenancies. Councils will be able to dish out 100% council tax premiums on any properties that are left empty.
- Aim to build over 300,000 new homes by 2020, part of the £44billion boost to the housing development package.
- £34million investment in the development of construction skills, a timely response to the predicted “cliff-edge” shortage.
Vehicles and Travel
- Fuel Duty rise that was planned for April 2018 has been cancelled, this applies to both diesel and petrol.
- Electric vehicle owners will be pleased to learn that charging their cars at work will not be classed as a ‘benefit in kind’.
- Diesel vehicle owners beware, if your car doesn’t meet the latest standards, then you will be bumped up a VED rate band. This only applies to cars, as the Chancellor rather patronisingly explained, “So before the headline writers start limbering up let me be quite clear: No white van man (or woman) will be hit by these measures.” The Company Car Tax diesel supplement is going up by 1% to generate money for a new Clean Air Fund which will assist the realisation of local air quality plans.
- Age of Young Person’s Railcard increased to everyone under 31 receiving a third off rail travel.
- Air Passenger Duty and long-haul economy rates will be frozen.
Living expenses
- Tobacco: up by 2% over RPI, meaning the price of a packet will go up by 5% and hand-rolling tobacco will increase by 1%.
- Alcohol: Increase on white ciders by 2019 because an investigation found that “Excessive alcohol consumption by the most vulnerable people is all too often through cheap, high strength, low quality products – especially so-called white ciders.” The good news is that the duty on all other alcohol is frozen at the current rate. This is a welcome relief for whisky drinkers, as there was a proposal to hike tax on whisky by 3.9%.
- Universal Credit: The system is receiving £1.5bn to sort out administration issues including; abolishing the 7-day wait, instead making a month’s payment available within 5 days of application. This will be available to do online and repayments can be stretched out over 12 months, instead of the current six months period. Housing benefit will be available for an additional two weeks.
NHS: £10bn additional investment announced.
Education, Police, Social Care, Fire Service: Extra £40m to train maths teachers.
There are many more fine details within this substantial document, but that’s you up-to-date on the big main points. Don’t hesitate to get in touch if you want to discuss the impact on your personal or business financial situation.
Tony Shanks