Today (23rd November) the Chancellor of the Exchequer, Philip Hammond, announced his first Autumn Budget. If you are wondering why this is the second Budget of 2017, this is because Mr Hammond decided to do an Autumn Budget instead of a less formal Autumn Statement. In 2018 he will do a Spring Statement and an Autumn Budget and this tradition will continue into the future (until the next time it is changed).
As usual the Budget covered everything from changes in welfare to changes in personal finance (which I have focused on in this post).
If you have any questions about how these new measures could benefit you or your family please do not hesitate to Contact us.
You can jump to a section using the following links:
- Stamp Duty for first time buyers
- Lifetime ISA
- Savings and Investments
- Inheritance Tax
- Our local area
- Personal Taxation
An Overview and Analysis of the 2017 Budget
Stamp Duty for first time buyers
Stamp Duty Land Tax (SDLT) is paid when a property is purchased. The Chancellor announced that SDLT for some first time buyers will be abolished and it will be reduced for others. The new rates for first time buyers are as follows:[table “” not found /]
If there is more than one buyer (for example if a couple purchase a property) all the buyers must be first time buyers otherwise standard SDLT rates will apply.
These changes will not apply to properties purchased in Scotland unless the Scottish parliament decides to implement the same rules.
Class 2 National Insurance contributions (a flat amount, paid by self-employed workers) will be scrapped as planned from April 2018.
However Class 4 National Insurance contributions (a percentage rate, paid by self-employed workers) will increase. Class 4 NICs are paid on self-employed earnings between £8,640 and £43,000 per year. The rate will increase from 9% currently to 10% in April 2018 and 11% in April 2019. Earnings above £43,000 are currently subject to 2% Class 4 NICs and this will remain unchanged (so only earnings between £8,640 and £43,000 are affected). This was announced in the 2017 Spring Budget and no changes took place in today’s Autumn Budget.
Shareholders will still be hit by one of Hammond’s announcements from the Spring 2017 Budget: major changes to dividend taxation (which I explained in greater detail in a previous post: Dividend tax changes) took place in 2016. These changes introduced a tax-free dividend allowance of £5,000 per year and varying rates of income tax for anyone with dividend income greater than £5,000. This allowance will be reduced from £5,000 per year to £2,000 per year in April 2018.
No changes were announced to the LISA. The LISA gives savers aged between 18 and 40 a generous government bonus as long as the LISA savings are eventually used for retirement or for a first house purchase.
The LISA is explained in more detail in another post which you can read here: Introducing The Lifetime ISA.
To great surprise from our industry, no new pension rules were revealed.
The Lifetime Allowance will increase in line with inflation (as planned) from £1,000,000 to £1,030,000 from April 2018.
The Lifetime Allowance is covered in more detail on our Lifetime Allowance page.
Savings and Investments
The ISA limit for the 2018/19 tax year will remain at its current level of from £20,000.
No changes were announced in relation to Inheritance Tax in today’s Budget. This means the Residence Nil Rate Band should increase by £25,000 to £125,000 per person from April 2018.
The Residence Nil Rate Band allows you to leave up to £100,000 of your home to your children (or grandchildren) tax free when you pass away. From April 2018 this will be £125,000 (or £250,000 for a married couple or civil partners).
You can read more about Inheritance Tax on our Inheritance Tax planning page.
Our local area
£320 million will be spent on the Redcar steelworks site.
The Northern Powerhouse was mentioned several times in the Budget but this mainly related to Manchester.
The Personal Allowance (the amount you can earn tax-free each year) will rise to £11,850 (from £11,500 currently) on 6th April 2018.
The higher rate band will rise to £34,500 (from £33,500 currently) as planned. This means anyone with total income under £46,350 (the £34,500 higher rate band plus £11,850 personal allowance) should not pay higher rate tax from April 2018.