27 November 2017

What the Autumn Budget announcement means for you

Chancellor Philip Hammond has unveiled his 2017 Budget against a background of uncertainty about the impact of Brexit on public finances over the next few years.

The budget contains help for first time home buyers, extra support for the NHS and a £1.7 billion transport fund for city regions.

The big announcement was the decision to abolish Stamp Duty for first-time buyers on properties costing up to £300,000, and on the first £300,000 of more expensive properties (up to £500,000), to help those living in areas with high property prices.

The context

In the UK, household finances are under pressure, with inflation at a five-year high of 3%, the first rise in interest rates for a decade, and average pay rising by around 2%.

This year, the Office for Budget Responsibility (OBR) expects the deficit to rise by £49.9bn, down from £72bn last year.

However, the OBR has also cut its forecasts for economic growth , from the 2% expected in March, to around 1.5% for this year and for the following four years. This means that the Chancellor had less money to spend than he expected to have in March.

The big changes

Stamp Duty - Today's announcement, will mean 80% of first-time buyers will pay no Stamp Duty and 95% will see a reduction, says the Chancellor. It means those buying homes valued up to £300,000 or up to £500,000 in areas with higher house prices will save up to £5,000.

Housing - A £44bn investment has been announced as part of the government's plan to build 300,000 new homes a year.

Tax changes - The Personal Allowance, the amount of money you can earn in a year before becoming liable for Income Tax, has been raised from £11,500 to £11,850 from April 2018. You'll pay 20% on earnings above the threshold. The higher rate threshold will go up from £45,000 to £46,530 from April 2018, after which 40% income tax is payable on earnings.

National Living Wage and Minimum Wage - The National Living Wage for workers over 25 will rise by an inflation-busting 4.4% from £7.50 an hour to £7.83 from next April, boosting those workers' pay by around £600 a year. For workers aged 21-24, the rate rises from £7.05 to £7.38 per hour. The National Minimum Wage rises from £5.60 to £5.90 for 18-20-year-olds.

Universal Credit - The initial seven-day wait has been abolished. Entitlement now starts from the day of the claim. Any household will be able to get a one-month advance in just five days. New claimants receiving Housing Benefit will receive that benefit for two further weeks to make it easier to pay their rent.

Things that were left out

Pensions - The lack of tinkering on pensions and tax relief on pension contributions will be a relief to many with no new limits put on how much you can invest tax-free each year.

However, the Chancellor was able to introduce a range of other measures including to support new industries such as driverless cars, 5G roll-out, broadband infrastructure and Maths and Computer Science in schools.

Other announcements include

Business Rates - The annual rise will now be in line with the consumer prices index (CPI) rate of inflation, rather than the Retail Prices Index (RPI), which is normally higher. This is expected to save businesses £2.3bn over five years and will be introduced from April 2018, earlier than previously announced.

Tobacco and alcohol duty
- Cigarettes will go up by the rate of inflation, plus 2% and rolling tobacco will have an extra 1% duty. All alcohol duty is frozen except there will be an increase in duty on high-strength white ciders.

Diesel Tax - To help the environment the vehicle excise duty rate for new cars will go up by one band for cars that don't meet emission targets. This does not apply to vans.

Cut price train travel - A new railcard extends the 18-25 Railcard scheme to give 1/3rd off rail travel for 26-30-year-olds from April 2018.

Fuel Duty - Frozen for 8th year in a row.

Mr Hammond ended his speech by encouraging people to “look forwards not backwards, to embrace change not hide from it, seize opportunities and together build a Britain to be proud of."

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