2017 Autumn Budget – What you Need to Know
Published: 27th November 2017
Chancellor Philip Hammond says his Autumn budget will ‘help families to cope with the cost of living’. The headline grabber was the scrapping of stamp duty for first time buyers on lower-priced properties. But what does this budget mean for you?
Tax – Personal Allowance raised
Low earners – minimum wages increased
Benefits – shorter waiting time for Universal Credit
Student loans – measures to prevent overpayments
Housing – Stamp duty abolished for most first time buyers, increase housing supply
Transport – new railcard for under 30’s, tax hike on new diesel cars
Smokers & drinkers – some higher duty
NHS – investment programme
Business owners – earlier cut in rate rises
Backdrop of UK Economy
Unemployment is at a record low since 1975, and is currently under 5%.
UK economy is growing by 1.5% in 2017, which is a little faster than expected; but the growth forecast for the next 3 years is slightly slower.
Better short-term growth combined with lower public sector borrowing means that the will start to fall.
Inflation is expected to rise to 3% by the end of 2017, falling towards the Government target of 2% during 2018.
You can earn more before you start paying any income tax.
The tax-free Personal Allowance increases (in line with inflation) from £11,500 to £11,850. The saving for a basic rate taxpayer is about £70 a year.
The threshold at which you start paying higher rate income tax (40%) rises from £45,000 to £46,350.
When? Tax changes from April 2018.
The National Living Wage increases from £7.50/hour to £7.83/hour, which brings in an extra £600 a year for a full-time worker. The Government aims to get the wage to £9 by 2020.
What is the National Living Wage?
The lowest wage that can legally be paid to employees aged 25+.
It is supposed to reflect the amount someone needs to earn to cover the basic costs of living and lead a decent life.
The National Minimum Wage (paid to Under 25’s) also goes up
|21-24 year olds||18-20 year olds||16 & 17 year olds||Apprentices|
|£7.38/ hour||£5.90/ hour||£4.20/ hour||£3.70/ hour|
When? Changes apply from April 2018
Check here to see if you’re earning the legal minimum, or if you’re owed payments from past years.
Note most interns should be paid at least the minimum wage, whatever the length of your internship. If there are any problems, you should take it up with your employer in the first instance, and if it remains unresolved, get advice from Acas, or report it to HMRC, who will investigate.
Universal Credit payments will be speeded up. Typically, people have waited 6 weeks for their first payment, meaning many were getting into serious debt and rent arrears; the Government aims to cut the wait to 5 weeks and give advance payments to new claimants facing hardship.
What is Universal Credit?
It is a major reform to the way benefits are paid and is gradually being rolled out across the UK.
Universal Credit replaces 6 benefits, merging them into one monthly payment (Income Support, income-based Jobseeker’s Allowance, income-related employment and support allowance, Housing Benefit, Child Tax Credit and Working Tax Credit).
The Student Loans Company and HMRC will improve their processes, to prevent payments being taken once a graduate has fully repaid their loan, and therefore reduce the number of accidental overpayments.
When? By April 2019
Stamp duty scrapped for most first-time buyers
- No stamp duty for first-time buyers on homes under £300,000
- To help those buying in London and other expensive areas, for properties costing up to £500,000, no stamp duty on the first £300,000; normal rates of stamp duty apply above that (currently the remaining £200,000 incurs 5% tax)
The changes apply immediately to purchases by first-time buyers in England, Wales and Northern Ireland. In Scotland, it depends on whether the Scottish Government decide to follow suit.
Who will it help?
The Government say 95% of all first-time buyers will benefit, with 80% paying no stamp duty. The estimated saving is £1,660 on a typical first-time buyer property.
But the likely benefit varies considerably throughout the country, because in many areas, first-time buyers already pay very little stamp duty. The Halifax mortgage lender reckons that in the North of England, the typical first-time buyer would save £24, compared to an average saving of £5,000 on London prices!
Source: BBC Business News (22 Nov 2017)
Use this stamp duty calculator to work out how much you have to pay on a property.
Source: BBC Politics News 22 November 2017
It’s important to note the definition of a first-time buyer:
Someone who has never owned/part-owned a property anywhere, whether bought or inherited.
The tax break doesn’t apply if you’re buying jointly and only one purchaser is a first time buyer.
You don’t qualify for the first-time buyer rates for buy-to-let purchases, only if the property will be your main residence.
Whilst the stamp duty change will help, the biggest upfront cost for first-time buyers is the deposit (average in UK is around £37k according to the Halifax). Also, it won’t apply to anyone trading up or downsizing, who may still be put off by the cost of stamp duty.
Measures to ease housing crisis
The Government set a target to build 300,000 new homes a year.
Local authorities can charge 100% council tax premium on empty properties (up from 50%) ‘to encourage owners of empty homes to bring their properties back into use’.
New Millennials travel card – a £30 railcard for discounted train travel for everyone up to age 30, which is an extension of the current young person’s railcard for 16 to 25 year olds. It gives up to a 1/3 off non-peak fares, but can’t be used on season tickets.
When? Available from Spring 2018
Tax hike for diesel – new diesel cars that don’t meet the latest emissions standards, will be charged a higher rate in road tax for the first year (one tax band higher than petrol cars). The increase is about £20 for smaller cars and £300 for larger vehicles.
if you’ve already got a diesel car, you won’t pay more – it applies to new diesel cars bought from April 2018 onwards.
A packet of 20 goes up 28p.
If you roll your own, you’ll pay an extra 41p on 30g of tobacco.
No increase in alcohol duty, except for some high-strength drinks e.g. white ciders
£6.3bn of new funding for the NHS, aimed at improving infrastructure and care, reducing patients’ waiting times etc.
Businesses hard hit by rising rates will be pleased to hear that a planned cut in rate increases will be brought forward by two years to 2018.
Click here for a budget round-up from the BBC.