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The Autumn Budget 2017: A Summary

 

The Chancellor Philip Hammond has announced his 2017 Autumn Budget, with first time buyers being the key winner from today’s budget.

In a Budget that was expected to raise funds for housebuilding, there were surprises to incentivize first time buyers in the form of stamp duty reductions. Effective from today onwards, first time buyers will pay £5,000 less on purchases between £300,000 and £500,000.

Other highlights included the rise of the National Living Wage from April 2018 onwards, maintaining the VAT threshold (despite concerns that this was going to be reduced), tax free benefits for electric company cars and a confirmed increase in the higher rate tax band and personal allowance for 2018/19.

For businesses, this was a mixed budget, with relatively little to comment on that would have a material impact. Key items including the VAT threshold which was confirmed as set to remain at £85k for the next two years, the rise in business rates to now be based on CPI not RPI, and the abolition of the indexation allowance for companies’ capital gains to be abolished from January 2018. Allowances for EIS and further research and development were more advantageous highlights for businesses, but this will impact the few rather than the many.

We have summarised the key highlights as follows:


Personal Taxation

  • Stamp duty to be abolished immediately for first time buyers purchasing properties costing up to £300,000. To help those in London and other expensive areas, the first £300,000 of the cost of a £500,000 purchase by all first-time buyers will be exempt from stamp duty
  • 100% council tax premium to be levied on empty properties for second home owners
  • The personal tax free allowance will rise to £11,850 in April 2018, an increase from £11,500 for 2017/18, while the higher rate threshold will start from £46,350, an increase from £45,000 for 2017/18
  • 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)
  • National Living Wage to rise in April 2018 by 4.4%, from £7.50 per hour to £7.83 per hour
  • Young person's railcard extended to 26-30-year-olds

 
Businesses

  • VAT threshold for small businesses to remain at £85,000 for the next two years
  • £500m support for 5G mobile networks, fibre broadband and artificial intelligence
  • £540m to support the growth of electric cars, including more charging points
  • For electric car drivers, charging cars at work will not be considered a benefit in kind for tax purposes
  • A further £2.3bn allocated for investment in research and development
  • Rises in business rates to be linked to CPI measure of inflation, not higher RPI. The Chancellor will also extend the £1,000 discount for small pubs to March 2019
  • The indexation allowance for companies’ capital gains will be abolished to bring the corporate tax system in line with personal capital gains tax. The indexation allowance takes inflation into account when calculating the chargeable gains of companies. The allowance will be frozen until January 2018 
  • The Chancellor is to double allowances for the Enterprise Investment Scheme (EIS) for "knowledge" businesses, although he said the enhanced perk would not allow the scheme to be used as a tax shelter for low-risk assets
  • Digital economy royalties relating to UK sales which are paid to a low-tax jurisdiction to be subject to income tax as part of tax avoidance clampdown

 
Other Announcements

  • Long-term goal to build 300,000 homes a year by the mid-2020s
  • £44bn in government support, including capital funding and loan guarantees, to boost housebuilding
  • Review into delays in developments given planning permission being taken forward
  • Tobacco will continue to rise by 2% above Retail Price Index (RPI) inflation while the minimum excise duty on cigarettes introduced in March will also rise
  • Duty on hand-rolling tobacco will increase by additional 1%
  • Duty on beer, wine, spirits and most ciders will be frozen
  • But duty on high-strength "white ciders" to be increased via new legislation
  • Fuel duty rise for petrol and diesel cars scheduled for April 2018 scrapped
  • Vehicle excise duty for diesel cars that do not meet latest standards to rise by one band in April 2018
  • Tax hike will not apply to van owners
  • Existing diesel supplement in company car tax to rise by 1%
  • Proceeds to fund a new £220m clean air fund
  • £40m teacher training fund for underperforming schools in England. Worth £1,000 per teacher
  • 8,000 new computer science teachers to be recruited at cost of £84m
  • Secondary schools and sixth-form colleges to get £600 for each new pupil taking maths or further maths at A-level or core maths at an expected cost of £177m
  • £320m to be invested in former Redcar steelworks site
  • Second devolution deal for the West Midlands
  • £1.7bn transport fund for city regions to be spent by mayors
  • £2bn for Scottish government, £1.2bn for Welsh government and £650m for Northern Ireland executive
  • Scottish police and fire services to get refunds on VAT from April 2018
  • £2.8bn in extra funding for the NHS in England
  • £350m immediately to address pressures this winter, £1.6bn for 2018-19 and the remainder in 2019-20
  • £10bn capital investment fund for hospitals

 
Should you have any queries on the above, please do not hesitate to contact a member of the Spirare team.