Autumn 2017 Budget
Please find enclosed our hot-off-the-press summary of this afternoon’s Budget.
As with the Spring Budget before it, and the Autumn Statement before that, this (new) Autumn Budget was another damp squib, in our opinion. HM Treasury still clearly has its mind on more important matters, and there was therefore little in terms of substantive change. On the subject of changes to pension rules, cited in just about every Budget ‘forecast’ I’ve read, there was nothing. The Chancellor managed to take attention from the lack of content through a well-choreographed series of jokes.
Thus, we think Mr Hammond could end up being defined as a Chancellor of little substance but plenty of banter. We wouldn’t have anticipated that when ‘Spreadsheet Phil’ took the job.
The press will undoubtedly focus on the reduced growth forecasts from the OBR, but in terms of the announcements that interested us, here’s a summary (including a fair bit more than normal buried in the accompanying paperwork):
Driverless and electric cars are on the ascendancy and dirty diesels on their way out. £400 million will be put towards a new charging infrastructure fund, and employees will not be hit with a Benefit-in-Kind for charging their cars at work. Road tax will go up for the worst diesel polluters.
More investment will be made in mathematics and computing in schools.
There will be Improvements to Universal Credit, including a reduction in waiting times.
The National Living Wage will rise from £7.50 to £7.83 per hour.
The Personal Allowance (the first slice of earnings that does not incur income tax) will rise to £11,850 a year. The Personal Allowance is still reduced for those earning £100,000 or more, and anyone earning £123,700 a year gets no Personal Allowance at all. As in previous years, if you fall into this bracket, PLEASE get in touch before the end of the tax year, as there are steps you can take to avoid this. We speak to people every year who get caught in this 60% income tax trap and find out too late.
Duties are going up for tobacco and high-strength cider. The hockey team at my old university will be up in arms about that. Duties on other alcohol and fuel will be frozen. Short haul travel and long-haul economy travel will see duties frozen, to be offset through higher duties on business/first class travel and private jets.
The Young Persons’ Railcard will now cover 26-30 year olds.
The biggest announcements were saved for housing. First-time buyers will now pay no stamp duty on the first £300,000 of a house purchase (on house purchases of £500,000 and below).
In terms of personal finance, the only smattering of interesting changes were confined to Venture Capital Trusts (VCTs) and Enterprise Investment Schemes (EIS). The rules around both have been tightened up to help the benefits focus on genuine growth businesses and start-ups. There will be a new extra £1 million EIS investment allowance for investments in ‘knowledge-intensive companies’ (taking the limit to £2m per person per year). VCTs will be subject to a new ‘risk-to-capital’ test, so that tax reliefs are applied only to genuine ‘growth businesses.’
I’m really enjoying picturing the budget cider-drinking, private jet-flying, cautious EIS investor who must be cursing his luck tonight.
As ever, please get in touch if you want to discuss how any of these changes affect your individual circumstances.