Three Big Statements From The Autumn Budget
In the first Autumn Budget the Chancellor Philip Hammond drove home the three main points above about the current economy, and plans for moving forward both short term and long term.
Below are summaries of the three main areas; Personal Tax, Business Tax and Miscellaneous changes.
1) Personal Tax & Wage Increases
Personal Tax Allowance
Due to the Personal Tax Allowance increase, HMRC claims that the average tax payer will pay £1,075 less tax than they would have done in 2010/11.
Basic & Higher Tax Bands Increase
The basic rate is has changed from £33,500 to £34,500, and the higher rate begins at £34,501 – an increase of £1,000). The additional rate remains at £150,000.
The amount of unused personal tax allowance that can be transferred between spouses or civil partners will remain the same.
(You can only take advantage of this if the person who receives the transfer is not a higher rate tax payer.)
Tax-Free Dividend Allowance
The present £5,000 tax-free allowance will be reduced to £2,000 from April 2018.
National Living Wage & National Minimum Wage Increases
New National Living Wage:
£7.83 (25 years and above)
New National Minimum Wage:
£7.38 (21 to 24 year old)
£5.90 (18 to 20 year old)
£4.20 (16 to 17 year old)
2) Business Tax & Funding Plans
There will be no change to Corporation tax, and it will remain at 19%.
The legislation has been revised to make it more compatible with commercial arrangements for allocating shares of profit.
Rather than rates increasing by the Retail Prices Index, they will now rise by any increase in the Consumer Price Index. This brings it all forward by 2 years and re-evaluations will be taken every 3 years, instead of 5.
Construction Skills & Digital Training Funding
£64 million will go towards both the teaching of constructions skills and digital training courses that specifically use Artificial Intelligence (AI).
Venture Capital Schemes
Changes are to be made to the Enterprise Investments Scheme (EIS), the Seed EIS and Venture Capital Trusts. The aim is to target Venture Capital Schemes on companies where there is a real risk to the capital being invested, because they aim to preserve it.
There will be a number of incentives and legislation that will encourage higher risk investments particularly in high-tech and high-growth firms.
3) Other Notable Announcements
Stamp Duty Abolished
80% of people buying their first home will pay no stamp duty as there will be no stamp duty on homes up to £300,000. First time buyers of homes priced between £300,000-£500,000 will pay stamp duty, but not on the first £300,000.
There will be a new railcard for the 26-30 age group. It will probably save people a third on rail travel, which is a consistent deal offered across the other railcards.
Individuals will not escape tax on payments made via an overseas beneficiary.
Fuel & Alcohol Duty
The Chancellor confirmed that fuel duty will be frozen for the eighth consecutive year. Duty will also be frozen for most alcoholic drinks.
Tobacco will be subject to a 2% increase, and hand-rolling tobacco by 3%, above inflation.
Households in need, who qualify, will be able to access a month’s worth of support within 5 days. This will be funded by an interest free loan that can be repaid over a 12 month period.
Claimants will be eligible from the day that they apply – rather than the present 7 day rule, which will be scrapped. Low income households affected by areas with higher rent increases, will receive an extra £280 on average to meet these higher costs.
Pension Lifetime Allowance
This allowance has been increased to 1.03 million.
Diesel Car Tax Rates
Car tax rates will go up by one band for diesel cars that don’t meet the latest standards. This applies to cars only and the money will go to a new clean air fund.