AUTUMN BUDGET 2017
The chancellor, Philip Hammond presented his UK Autumn 2017 Budget on 22 November 2017. These are the main highlights of his live speech.
'At a critical stage', the UK is still looking for a special relationship with Europe.
The country should be prepared for every eventual outcome: £3b earmarked to deal with extra Brexit changes, in addition to £700m already budgeted.
Office of Budget Responsibility (OBR) predictions (for the term of this government)
Currently, 1.4 million unemployed: OBR predicts will fall by 600m.
Productivity flat: GDP expected average 1.5%
Debt too high: expected to peak this year and then start to decline. Currently 86.5% of GDP.
Investing in tech and infrastructure
R & D Tax Credit to increase to 12%
Doubling of EIS investment limits for knowledge-intensive companies
Patient Capital 'action plan' to unlock cash for investment in companies
A new British Bank fund, with standby in case funding, is no longer available post Brexit from the European Development Fund.
Cars, and car tech
Autonomous vehicles: a new £400 million infrastructure fund
£100m in Plug-In-Car Grant, and £40m for research into charging
No BIK for at work vehicle charging of electrical vehicles
New levy on new diesel cars
Fuel duty continues to be frozen
Plastic bottle tax: a new charge on single-use bottles.
Extra maths for everyone: training incentives for schools and pupils.
Computer training from schools to workplaces includes a new partnership between Government, CBI & TUC with £30m grant for distance learning.
Scotland: measures for oil and gas
Wales: tolls to be abolished on Severn Bridge
Various measures to assist cash flow for claimants and address deliver benefits
Removal of 7-day wait and advances of up to 100% of benefit
Full statement on 23/11/2017.
Income tax rates
From April 2018:
Personal allowance rises to £11,850
Higher rate threshold to rise to £46,350
Tax gap between the Scots and the rest of the UK widens
A change in the threshold at which 40% tax is levied in England and Wales by the Chancellor this week means that from April someone earning £50,000 in Scotland will pay £670 a year more than a colleague on the same income-based south of the border. Currently, Scots pay 40% tax on earnings in excess of £43,000 compared to the higher threshold of £45,000 in the rest of the UK, which will increase to £46,350 from April.
Source: The Guardian (25/11/2017)
National Living Wage will rise from £7.50 an hour to £7.83, as planned
Misc tax and benefits
From April 2018
Freeze on alcohol duty
From April 2019
Increased duty on strong ciders
A new Young Persons Railcard
£10b for capital investment in front-line services
£2.8b extra for NHS England, over 3 years
Tax Avoidance & Evasion
We hear that HMRC has 'raked in an extra £160bn over seven years'.
Phased reduction in CT to continue
Indexation allowance for capital gains for companies frozen at 31 Dec 2017
No changes to threshold: will consult on design of threshold
Online markets: joint liability
Annual uprating: switch from RPI to CPI moved forward by two years.
Staircase tax: measures to compensate business affected by the high court ruling.
Pub £1,000 discount to continue for a year.
Revaluations will be every three years (instead of five)
Digitalisation and tax
Government to publish a position paper on taxing digital platforms
From April 2019 income tax on royalties paid by multinationals to their offshore companies in low tax jurisdictions
Grenfell Tower disaster
More financial assistance to create community space, deal with mental health and support the local authorities.
Local authorities to be allowed to set a 100% premium on council tax.
Aim to increase the supply of land and re-start the SME housing sector
£44b to be committed to loans and guarantees to deliver 300,000 homes per year
Planning reforms to make use of urban land, a statement being made in due course.
Review of the gap between the number planning permissions granted and buildings being built.
New 'growth corridor' to Oxford.
Stamp Duty Land Tax
No SDLT for first-time buyers purchasing homes costing up to £300,000
Relief available on first £300,000 for homes costing up to £500,000 £300k - £500k SDLT sliced @ 5%..
Overall there was more than expected for businesses and there were a lot of macro announcements that will be beneficial to both large and small companies. The revision in economic growth downwards is a major concern as well as productivity and investment - both of which are also very low. Unlike the Autumn Statement though this was a more positive Budget for business.
After the 2015 Autumn we were expecting a blockbuster Budget, but events and the growing uncertainties clearly scaled back some ambitions. For example, proposals to undertake a major reform of pensions tax relief were kept firmly in the stable, although he announced a new lifetime ISA for those under 40 that might be a model for the pension of the future. There were some surprise announcements including a further reduction in the Corporation Tax rate to 17% from 2020 and reductions in the Capital Gains Tax rates.
Economy & Politics
Once again the Chancellor has found the economy is unwilling to go along with his plans. Worse than forecast economic growth and reduced business confidence have undermined the spending plans made in the Autumn Statement only four months ago. While this is disappointing it shows how little room for manoeuvre the government has and highlights the need for a more comprehensive approach to management of the public finances.
On the back of this budget, eliminating the deficit looks increasingly like a three parliament problem. Unless there’s a massive boost to the public finances towards the end of this Parliament, the Chancellor will have to deliver just under half of the cuts to public spending in the last year of the current Government. Given the cocktail of threats from the global economy, achieving a surplus looks increasingly difficult without starting to raise taxes.
This was a significant Budget in that it will be the last UK one before income tax decisions, in-particularly, are devolved to the Scottish Parliament from 06 April 2017.
Industry body Oil and Gas UK welcomed the chancellor's announcement, saying the move would reduce the headline rate of tax paid on UK oil and gas production from between 50% and 67.5% to a rate of 40% across all fields. George Osborne said that the tax support announced for the North Sea was only feasible because of "the broad shoulders of the UK." Environmental charity Friends of the Earth expressed disappointment at the tax cuts saying: "The chancellor's budget was full of 'next generation' rhetoric, but tax breaks for the climate-wrecking oil and gas industry pose a real threat to the security of people, the economy and planet.The UK government said the North Sea Budget measures were worth £1bn over five years. In his budget speech, Mr Osborne said: "The oil and gas sector employs hundreds of thousands of people in Scotland and around our country. "In my budget a year ago I made major reductions in taxes, but the oil price has continued to fall so we need to act now for the long term. "I am today cutting in half the supplementary charge on oil and gas from 20% to 10% and I am effectively abolishing Petroleum Revenue Tax too - backing this key Scottish industry and supporting jobs right across Britain."
Other Budget measures particularly affecting Scotland included:
- Duty on Scotch whisky to be frozen
- Fines from banks caught up in the Libor scandal will pay for community facilities in Helensburgh and for naval personnel at Faslane
- The Scotland Office said Scotland's allocation under the Barnett Formula will increase by £658m over the next four years
- Some £5m will be provided for the new V&A museum in Dundee
- Investment in first Inverness and soon Edinburgh via "city deals".
Scottish Political reaction to the Budget was particularly relevant and was generally critical of the raising of the 40% higher rate tax threshold and reduction in Capital Gains Tax. Left of centre criticism and other politicos elsewhere expressed dissent on grounds of unfairness, UK wide, of announced austerity cuts in disability benefits; and; 'old boy' "mates rates" claimed inherent within both the announced reductions in Corporation Tax and those for CGT. Chancellor George Osborne's frustratingly unimpressive record at reining in the deficit from his own previous budget statements and predictions made is starting to gain focus, as the No. 1 economic issue of the day. In Holyrood, despite the Scottish opposition parties pushing for answers, the Scottish government are generally being non-committal as to the higher rate tax threshold to bring more Scots UK taxpayers back into the 40% band of income tax. Like licensing for fracking shows, with power brings great responsibility. In their rhetoric though, the Scots government says they will, but have as yet made no political promises or manifesto pledges about tax should it be, (as is likely), the SNP in a position to affect matters here in a future Scottish Budget. If taxes are either raised or cut in Scotland in 2017 it will affect every employer and employee in Scotland and its economy. The rUK will have different tax rates than those of taxpayers classed resident in Scotland. Interesting times lie ahead in these 'austerity times' for Scottish taxation rates. The currently very different political consensus and ambitions north of the border to that of the government of the mother parliament of Westminster and the rUK parliaments in general guarantee it. Then there is the EU. It is all then a case of wait and here :
From April 2017, the Scottish government will be able to set both the threshold and rate of income tax, but not the personal allowance.
Sources cited and thanked by Robert Mitchell here: BBC & ICAEW
The headlines. AIA reduction to £200,000, Corporation tax reduction to 19% and then 18%, Advisory Mileage from 1 June, Buy to Let - mortgage interest scaled restriction, of 10% Wear & Tear relief, ISA changes for 'peer to peer', Living wage Personal Allowance changes for 2016/2017 & 2017/2018 Dividend Tax, IHT - new scaled relief for .
The Chancellor of the Exchequer George Osborne has announced the UK Budget 2015 to Parliament. The budget focussed on reforms that benefit workers, savers and first-time buyers. It is the final Budget announcement before the next general election, which is due to take place in May. In his speech, the Chancellor put forward the idea that Britain was well down the road to recovery, boasting the fastest growth of G7 nations in 2014 and the strongest annual growth since 2007. Labour leader Ed Miliband responded to George Osborne's speech by saying: "This a budget that people won't believe from a government that is not on their side."
Below is a summary of key points from the Chancellor's Budget speech.
The UK had the fastest growth in the G7 in 2014 The UK economy had the fastest annual growth among G7 economies in 2014, and the strongest annual growth since 2007. At the end of 2014, employment had reached its highest ever level, unemployment has been falling in every region across the UK, and inflation is at a record low.
But risks still remain and the government has pledged to support businesses and boost productivity.
Debt will be falling as a share of GDP in 2015-16
will be falling as a share of GDP from 2015-16. This is a year earlier than forecast Autumn Statement.
By 2014-15, the deficit is forecast to have fallen by half, from 10.2% at its peak in 2009-10, to 5% in 2014-15. In 2018-19, the government will have a surplus (will raise more in taxes than is being spent) of £5.2 billion.
Abolishment of Annual Tax Return
The current system of Annual Tax Return will be abolished and replaced with a rolling online system that will see figures automatically uploaded into new digital tax accounts.
Users will be able to set up direct debits to pay outstanding tax all year round, while basic information that HMRC already has access to, such as earnings and pension income will be kept on record to save having to re-enter it.
The new system will begin rolling out in 2016 and will be universally available by 2020.
The tax-free personal allowance is being increased in April 2017, to £11,000
To make work pay and ensure families can save more, the tax-free personal allowance - the amount people earn before they have to start paying tax - will rise to £10,800 in 2016-17, and £11,000 in 2016.
To make sure the full benefits of the personal allowance increase are passed on to higher rate taxpayers, the government will also increase above inflation the point above at which higher earners start paying 40% tax. It will increase by £315 in 2016-17, and by £600 in 2017-18 - taking it to £43,300 in 2017-18.
A Personal Savings Allowance will remove 95% of taxpayers from savings tax altogether
In April 2016, a tax-free allowance of £1,000 (or £500 for higher rate taxpayers) will be introduced for the interest that people earn on savings.
If they are a basic rate taxpayer and have a total income up to £42,700 a year, they will be eligible for the £1,000 tax-free savings allowance. If they are a higher rate taxpayer and earn from £42,701 to £150,000, they’ll be eligible for a lower £500 tax-free savings allowance.
The Personal Savings Allowance fact sheet is available here
Help to Buy ISA
For every £200 people save towards their first home, the government will put in an extra £50, up to a maximum bonus of £3000.
The Help to Buy ISA fact sheet is available here
In the 2015-16 tax year, people will have complete freedom to take money out of an ISA and put it back in later in the year.
Instead of only being able to put up to £15,240 in the 2015-16 tax year into an ISA in total, people can take out their money and put it back in within the same year, without losing their ISA tax benefits - as long as the repayment is made in the same financial year as the withdrawal.
Pensioners will be given the freedom to sell their annuity for a cash lump sum
From April 2016, people who already have an annuity will be able to now effectively sell it on, so that they too can benefit from the pension freedoms announced last year's Budget.
At the moment, people who have bought an annuity cannot sell it without having to pay at least 55% tax. From April 2016, the tax rules will change so that people who already have income from an annuity can sell that when they choose and will pay their usual rate of tax they pay on income, instead of 55%.
Charities will be able to claim more gift aid on small donations
The amount of small donations charities can get an extra 25% payment on in gift aid without needing any paperwork is increasing from £5,000 to £8,000 a year.
Farmers will have more time to average their profits for income tax
This extends the period from two to five years and will give farmers additional security as they typically have volatile profits due to uncontrollable factors such as the weather.
Increase in bank
The government is increasing the rate of the bank levy (one of the taxes that banks pay) from 1 April 2015. This will raise an additional £900 million a year.
Cancelling the fuel duty increase scheduled for September
Fuel duty will be frozen again; since 2011, the government has cut and frozen fuel duty, saving a typical motorist a total of £675 by the end of 2015-16.
By the end of fuel duty will have been frozen for five years, resulting in the longest duty freeze in over 20 years.
Consultation on tax relief for local newspapers
The government is announcing a consultation on how to can provide local newspapers with tax support.
The full library of Budget 2015 documents is available here
The Treasury has also made available a range of infographics that explain the facts and figures on their Flickr account. They are available here
A full transcript of the Chancellor's speech is available here
HMRC has made available all documents and announcements from the Budget here
Budget 2014 at a glance
Personal tax summary
The 'Flat Line Budget' in summary:
Government subsidies to the banks and builders to build more homes.
Drink 299 pints of beer get 1 free. Joke!
At least fuel duty, (still too high), has been frozen.
The Inconvenient Truth?
A personal commentary based on and around Budget 2013 and the UK Economy.
In the UK we are told not to think of the 'Housing Ladder' anymore, just the 'Housing Adder' as in snakes and ladders. So the old adage that 'your house is only worth what people are willing to pay for it' has never been truer. Those looking to make a fast buck with rising home equity will wait a long time for that to happen again. The UK economy is so messed up that a mortgage has become a 'tomb' for many, that they can't escape, because if they need to move for a job etc, then they can't sell on. The only solution appears to be to buy 'new build' with a 20% equity government loan, perhaps foregoing their 'established properties' market value in the meantime. The only way the banks will assist here is if the Bank of England lets them hike interest rates. So these rates that we currently have are making the banks hold on to their money. The temptation then is to bring interest rates' via B of E fixing it so. That way these banks will not get a return on their money by say 0.5% at the B of E prevailing rate. In other we could force them to start lending out the money we as taxpayers bailed them out with! To build houses, get the home market moving again, start good business ideas, buy cars etc etc. Its a scandal that the banks are being subsidized yet again to provide 'new build' mortgage finance; and; getting away with not helping rebuild the UK economy after all the taxpayers cash given to them by UK taxpayers, to save them closing, back in 2008. Taxpayers may not be able to aggressively avoid tax liabilities, but if you are bank, it seems you can avoid doing your fair share to rebuild the economy. Views expressed are Robert Mitchell's.
An OAP 'Stealth Taxes' Budget?
Or simply, George Osborne's 5% HRT cut to the bankers or millionaires on his Xmas card list?
Opinion. As predicted from my recent experience, and well before any exit polls, the difficult and "unavoidable" choices facing the UK voter in the recent election has led to no majority political party in power - a hung Parliament. Unsurprising. Since the late 1980's Britain seems to favour left of right and right of left, pluralist governments. A move to the in line with the trends in social demographic attitudes post PM Thatcher. David Cameron & Nick Clegg have wisely recognized this trend and formed an ambitious Coalition Government or 'Con-Dem', some sneer, with many challenges ahead. Labour in turn now the challenge of freshening up their now all washed up 'New Labour Project'. While the Nationalists wait for the economic wind to change, but increasingly realise, they're being way too idealistic in times of public spending cuts, and their best bet lies in a Federalist UK project, (possibly even including the Republic of Ireland), of the British Isles. Another PM Blair project muted but quietly dropped.
The VAT Rate of 20% from 4th January 2011, was an "arithmetical certainty".