What the 2017 Budget means for you and your business
Key points of the Autumn Budget 2017
Click to view our short video on the budget
Today the Prime Minister brought Chancellor Philip Hammond a box of cough sweets as he delivered the Budget – a reference to her own ill-fated speech, which she coughed through at this year’s Conservative Party conference.
He didn’t need them. After much throat clearing about balancing investment in skills, technology and infrastructure with help for struggling families, he finally got down to the brass tacks of what the budget means for businesses and individuals.
This is our summary of the announcements that are likely to have the most impact on THP’s clients.
Cost of transport
From April 2018, the Vehicle Excise Duty on all but the newest diesel cars will go up one band, while the diesel supplement on company cars will rise 1%. The chancellor stressed this rise would only apply to cars, and that vans would not be affected.
Money raised from this measure will pay for a £220m Clean Air Fund, while £400m will be invested in electric car charging infrastructure.
Once again, fuel duty riseson both petrol and diesel were cancelled for another year.
26-30 year olds will benefit from a new rail card, helping them to cut the cost of travel.
From April 2018, the personal tax allowance will rise to £11,850. The higher tax rate threshold will go up to £46,350.
Measures affecting businesses
Perhaps the most eye-catching measure was a new £2.3bn investment in Research & Development, including an increase in the main R&D tax credit to 12% - helping firms to innovate.
Meanwhile, from April 2018 the National Living Wage will rise from £7.50 to £7.83, helping the lowest paid but increasing costs of employment.
The VAT threshold will remain at £85,000 for the next two years, but the chancellor will consult on whether the system could be better designed.
The business rates regime is also about to change. From April 2018, business rate increases will be linked to the Consumer Prices Index (CPI) rather than the Retail Prices Index (RPI), potentially saving businesses millions.
The chancellor also announced measures to solve the so-called "‘staircase tax" by extending the £1,000 discount for pubs with a rateable value of less than £100,000 for another year to March 2019.
Mr Hammond also unveiled plans to crack down on online VAT fraud making all online marketplaces jointly liable with their sellers for paying the tax.
At the same time HMRC will start to charge more tax on royalties relating to UK sales when they are paid to a low tax jurisdiction. This will raise about £200m a year.
Housing and landlords
The key announcement of the Budget was a measure to get more first time buyers on the property ladder. From today, stamp duty will be abolished for first time buyers on properties of up to £300,000, with it being waived on the first £300,000 of homes worth up to £500,000.
The chancellor also unveiled £44bn of capital funding and loans to support house building over the next five years. He aims for 300,000 new homes to be built annually by the mid 2020s.
Also, to free up housing, local authorities will be allowed to levy 100% council tax premium on empty properties.
Tobacco tax will continue to rise at inflation plus 2%. Cigarettes could go up by 6%. An extra 1% will be levied on rolling tobacco.
Alcohol duty will be increased on cheap, high strength drinks such as white ciders. Tax on all other ciders, wines, beers and spirits has been frozen.
The chancellor unveiled measures he hopes will combat falling productivity, albeit within the context of falling borrowing. But whether the measures he announced go far enough to stimulate entrepreneurship or raise the living standards of the less well off, doubts must remain. This was to have been the Budget that made the economy fit for Brexit – at first glance it offers little more than tinkering around the edges.
Would you like more detail on this year’s Budget announcements? If so, download our free guide.