The Chancellor’s second Budget of 2017
Mr Hammond will probably be pleased if commentators decide that his Autumn Budget was a steady-as-she-goes, broadly modest Budget. After the national insurance u-turn he was forced to make after his March Budget this year, that was probably his aim.
In any case, for a variety of economic and political reasons, the Chancellor announced a relatively modest net tax giveaway of just under £1.6 billion for the coming tax year.
His main attention-seeking move was to give first time buyers an exemption from stamp duty land tax on the first £300,000 of value for properties worth up to £500,000. Rumours – probably from the Treasury itself – had trailed changes along these lines, and the new relief represents more than a third of his net giveaway.
With income tax, the changes were much less dramatic – increasing both the personal allowance and the higher rate threshold by 3% – the standard inflation-linked increase. ISA investors saw their main ISA and lifetime ISA investment limits frozen and only children saw a small increase in their specialist ISAs. There was better news for pension savers who enjoyed a £30,000 increase in the lifetime allowance and thankfully no cuts to the annual allowance.
Several measures were designed to introduce much more of a focus on risk investment for venture capital trusts, enterprise investment schemes and seed enterprise investment schemes.
Most Chancellors tend to cram all the painful announcements into Budgets at the start of a Parliament; for a range of reasons, Mr Hammond decided that he did not need – or perhaps couldn’t afford – to do this.
Please find below a brief overview of the key points of the Budget and if you haven’t lost the will to live with it all then here is a comprehensive list of the whole shebang
- Tax-free personal allowance to rise to £11,850 in April 2018
- Higher-rate tax threshold to increase to £46,350
- The pension lifetime allowance will be increased from £1 million to £1.03 million from April 2018. There will be no change to the annual allowance.
- The ISA limit will be frozen at £20,000 and the LISA limit at £4,000, but the junior ISA and child trust funds will rise to £4,260 from April 2018
- VAT threshold for small business to remain at £85,000 for two years
- The “Staircase Tax” will be scrapped. Businesses previously hit will have original bill reinstated.
- £500m for 5G mobile networks, fibre broadband and artificial intelligence
- £540m to support the growth of electric cars, including more charging points
- A further £2.3bn allocated for investment to be provided for R & D
- Rises in business rates to be pegged to CPI (Consumer Price Index) measure of inflation, not RPI. The CPI is often lower than RPI
- Income tax to be applied from April 2019 on digital economy royalties relating to UK sales which are paid to a low-tax jurisdiction, raising about £200m a year
Alcohol, tobacco and fuel
- Tobacco will rise by 2% above Retail Price Index (RPI) inflation while the minimum excise duty on cigarettes introduced in March will also rise, as will duty on hand-rolled tobacco
- Duty on beer, wine, spirits and most ciders will be frozen but duty on high-strength “white ciders” to be increased via new legislation
- Vehicle excise duty for diesel cars that do not meet latest standards to rise by one band in April 2018. This will not apply to van owners
- Existing diesel supplement in company car tax to rise by 1%, the resulting proceeds will fund a new £220m clean air fund
- Fuel duty rise for petrol and diesel cars scheduled for April 2018 scrapped
- Stamp Duty will be scrapped for first time buyers on houses up to £300K and on the first £300,000 of properties up to £500,000.
- Capital funding of £44bn to be made available towards achieveing the aim of building 300,000 new homes per year
New Rail Card / Air Passenger Duty
- New Rail Card will allow one third off the price of rail travel for 26 – 30 year olds.
- Short-haul air passenger duty rates and long-haul economy rates to be frozen, paid for by an increase on premium-class tickets and on private jets