Following Chancellor Philip Hammonds unveiling of the Autumn Budget last week, we thought it would be helpful to give you a breakdown of some of the key changes announces, and unpack their impact.
- Abolition of stamp duty for first-time buyers on properties worth up to £300,000.
- A pledge of £44bn to go towards building 300,000 new homes per year through to mid-2020s.
- Councils given power to levy a 100% council tax increase on empty properties.
- £125m pledged over the course of the next two years to aid 140,000 people with rental costs.
- £28m to go towards new housing schemes in Manchester, Liverpool and the West Midlands, aiming to halve homelessness after 5 years, and eliminate it after 10.
- Private home building to see £8bn of financial support.
- £2.7bn fund for housing infrastructure.
- £1.1bn to go towards urban regeneration on strategic sites, and £400m to go towards housing estates.
- Review into the ways in which obtaining planning permission could be sped up.
The housing feature grabbing all the headlines from the 2017 Budget is the stamp duty change. The proposed reforms will only affect you if you’re a first-time buyer living in England, Northern Ireland and Wales. The Scottish government is yet to decide on whether to follow suit, and the change will only be in effect until April in Wales, when the Welsh government decide on whether to enact their own policy, or fall in line with Westminster’s.
The previous threshold for paying stamp duty was £125,000 in England, and this has now been raised to £300,000. The first £300,000 on properties costing up to £500,000 will also not be charged stamp duty in more expensive areas to live, such as London, while the additional £200,000 will only incur a 5% cost. The reforms will see approximately 95% of all first-time buyers benefitting, with only people buying a home as a couple in which one of whom isn’t a first-time buyer being ineligible for the tax break.
However, the biggest omission from this budget is the lack of help towards putting down a housing deposit, which is the biggest cost for first time buyers. The stamp duty changes also won’t be of any assistance to homebuyers who are trading either up or down.
The government continues its campaign against tobacco use, keeping prices steadily rising as a deterrent to potential smokers.
- Tobacco prices are set to continue to rise by 2% above the Retail Price Index (RPI). This will equate to paying an additional 28p for a 20 pack of cigarettes.
- Additionally, the duty on hand-rolled tobacco will rise by a further 1%.
- The minimum excise duty on cigarettes which was introduced in March is also set to rise.
Amidst recent calls by health campaigners to curb binge drinking, the government has started to trickle in some legislation putting the price of alcohol up.
- Legislation will be drawn up in 2019 which will increase the duty on high-strength drinks such as white ciders, which are most commonly associated with binge drinking.
- However, the duty on beers, spirits, wines, and lower strength ciders will be frozen. This will equate to a penny off the price of a pint of beer, and 6p off a bottle of wine.
- The planned rise in fuel duty for both petrol and diesel cars, which had been scheduled for April 2018, has now been scrapped.
- The vehicle excise duty for cars, vans and motorbikes registered prior to April 2017 will rise by the rate of inflation.
- Vehicle excise duty for new diesel cars which do not come up to the latest European emissions standards will increase by one band in April 2018.
- The funds raised from this will go towards a new £220m clean air to crack down on England’s pollution hotspots.
- Diesel van owners will not be affected by this tax increase, however.
- Diesel company car tax will also rise by 1%.
- The government has pledged £400m to fund new electric vehicle charging infrastructure.
- The government will also alleviate taxes for those charging electric vehicles at work.
The government is taking steps towards making Britain greener, by levying additional taxes against diesel motorists, whilst simultaneously supporting the growth of electric cars in the UK.
Diesel has a greater effect on the environment than petrol cars, hence the greater increase in road tax that the government is planning for diesel vehicles over petrol ones.
However, in a move that is welcomed by many motorists, fuel duty has been frozen once more.
Business, Taxes and wages
- In a bid to support small businesses, the VAT threshold for them will be frozen at £85,000 for two years.
- Business rate rises will be in line with the lower CPI measure of inflation, rather than the RPI, which will cut £2.3bn.
- The phasing out of capital gains tax relief for international buyers of UK commercial property was announced.
- In an effort to clamp down on tax avoidance, the digital royalties of UK sales being paid to low-tax jurisdictions will become subject to income tax. The government estimated that this will raise an additional £200m per year in tax revenue.
The following changes are set to be enacted in April 2018:
- The National Living Wage will be increased by 4.4%, up from £7.50 to £7.83.
- The amount of tax-free personal income is set to rise with inflation to £11,850, in April 2018.
- The 40% tax rate threshold is also set to increase to £46,350.
All of these changes add up to you earning more before tax. The increase in the living wage will see millions benefiting from an increased basic income, whilst the personal allowance increase gives an average saving of £100 per year for the 26 million basic rate tax payers in the UK. The Conservatives seem to be on their way to achieving their manifesto pledge of increasing the personal allowance to £12,500 between 2020 and 2021.
Likewise, the Conservatives pledged to further raise the 40% tax rate threshold to £50,000 by the same period, which will affect an additional 5.2 million higher rate tax payers.
Pension and Universal Credit
- The state pension will increase in line with inflation by 3% in April. This increase will amount to an additional £3.65 per week.
- £1.5bn pledged in order to “address concerns” related to delivering universal credit.
- The initial seven day waiting period for the processing of claims will be scrapped.
- From January onwards, universal credit claimants will receive their advance payments in their entirety within five days of applying.
- The average time taken for the first payment will be reduced from six weeks down to five.
- The period for the repayment on advances will double from 6 to 12 months.
The rise in the state pension is welcome news for all those recipients of it, even if it is only in line with inflation.
The government has also announced further tweaks to its new universal credit system. Universal credit merges six different benefits into one single new payment. The government has taken aim at complaints that currently people are having to wait too long to receive their payments – most face a six week wait for the first payment, whilst a fifth of people face even longer delays in getting their payments.
Various measures announced by the Chancellor will cut wait times down by a week.
New Universal Credit claimants who also receive of Housing Benefit will now be able to continue to receive both for two weeks.
Technology, Research and Development
- £2.3bn has been made available for general research and development.
- £500m worth of investment in digital infrastructure, such as 5G mobile networks, superfast full fibre optic broadband, and artificial intelligence.
- The government also wants to promote digital fluency, and has made £30m available for the creation of digital skills distance learning courses.
- Underperforming schools will see £40m go towards training teachers, an amount that is worth around £1,000 for every teacher.
- £84m will go towards setting up a new National Centre for Computing, and the government will work towards recruiting 8,000 new computer science teachers.
- For every pupil that studies A-level maths or further maths, their secondary schools and sixth-form colleges will receive a grant of £600. This is estimated to cost £177m.
- The government has pledged an additional £2.8bn for the NHS in England. This will come over the course of the next three years. £350m will go immediately in order to ease pressures over the winter period. 2018-19 will see the next £1.6bn in investment over the course of the year, with the remaining £850m to come in 2019-20.
- A capital investment fund worth £10bn has been set up to go towards hospitals, running up until 2022.
- The government also pledged to honour any recommendations by independent review bodies that nurses receive a pay rise by finding money to facilitate it, although for the moment there will be no pay rise for nurses.
Transport and Infrastructure
- A £1.7bn fund to go towards transport and infrastructure in six city regions.
- The Redcar steelworks site will see £320m worth of investment.
- Greater Manchester will attain increased devolved powers.
- The TransPennine train route will receive £30m worth of investment aimed at improving mobile and digital connectivity.
- Hailed as the new ‘millennial’ railcard, the young person’s railcard, which discounts rail travel by 1/3, will also be made available to 26-30 year-olds.
Scotland, Wales and Ireland
- Scotland to receive £2bn.
- Wales to receive £1.2bn.
- While Northern Ireland receives £650m.