The UK Autumn Budget 2017
Preparing for the exit – in what is likely to be the penultimate Budget before Brexit, the challenges for the Chancellor, both from a fiscal and political perspective, have moved into sharper focus since the last Budget in March 2017. Noting that negotiations with the EU are in a “critical phase”, Mr Hammond struck a positive tone, speaking of a “world on the brink of technological revolution” with Britain “at the forefront”, whilst acknowledging the “challenges ahead”.
The most eye-catching announcement to abolish stamp duty for the majority of first-time buyers concentrated on the younger demographic, against a backdrop of perceived intergenerational inequity. There were no other major giveaways. Despite expectations, there were also no significant announcements affecting pensions, other routes to long-term saving or tax on inheritances, which will be a relief to many.
Income Tax - The personal allowance will increase in line with inflation to £11,850 from April 2018, whilst the higher-rate threshold will also increase in line with inflation to £46,350. The 0% rate of savings allowance remains at £5,000.
National Insurance - As previously announced, the abolition of Class 2 NICs has been delayed to allow time for review and the intended increase in Class 4 NICs will no longer proceed.
Capital Gains Tax - The annual allowance will increase to £11,700 from April 2018.
Inheritance Tax - There were no changes announced for Inheritance Tax.
Pensions - The State pension will increase by 3% (CPI rate for September) in April 2018. The standard minimum guarantee in the pension credit increases by a similar amount. There are no changes to the annual allowance, tapered annual allowance or money purchase annual allowance, and the lifetime allowance for pension funds increases by CPI to £1,030,000 from April 2018 as previously legislated.
ISAs - The ISA allowance is held at £20,000, and the JISA allowance increases by CPI to £4,260 in April 2018.
Enterprise Investment Schemes - The Chancellor has doubled the Enterprise Investment Schemes (EIS) investment limit for Knowledge Intensive Companies. This means the maximum annual tax exemption on EIS investment would rise from £1 million to £2 million. Part of the change ensures EIS are not used as a shelter for low-risk capital preservation schemes.
Stamp duty - With immediate effect stamp duty will be abolished for first-time buyers on properties worth up to £300,000, or the first £300,000 of a property worth up to £500,000.
Taxation of trusts - The Government will publish a consultation in 2018 on how to make the taxation of trusts simpler, fairer and more transparent.
Corporation Tax - The indexation allowance on capital gains will be frozen from 1 January 2018. This removes relief for inflation, which is not available elsewhere in the tax system.
Anti-avoidance measures - The bulk of the spending in the Budget was paid for by a swathe of anti-avoidance measures (along with the freeze in indexation for Corporation Tax). The Government will also consult on extending the changes implemented for off-payroll working rules (known as IR35) for the public sector to individuals in the private sector.