The Autumn Budget 2017: the major announcements explained

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.

tall for seminar Andy Cowan
22 November 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
  • The Higher-rate Threshold will also increase in line with inflation to £46,350
  • The 0% rate of savings allowance remains at £1,000

Capital Gains Tax

  • The annual allowance will increase to £11,700 from April 2018

Inheritance Tax

  • There were no changes announced for Inheritance Tax

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.

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
  • The lifetime allowance increases by CPI to £1,030,000 from April 2018 as previously legislated

ISAs

  • The ISA allowance is held at £20,000
  • 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 investment firms
  • 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
  • Under the new proposals Knowledge Intensive Companies will be able to raise a maximum of £10 million, up from £5 million

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
  • First-time buyers will not get relief on the purchase of properties worth more than £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.

An economic overview

Ben Seager-Scott, Chief Investment Strategist, has written an economic overview of the Autumn Budget and what it could mean for investors.

We hope you have found this Budget update helpful. Please do get in touch if you have any questions or would like more information.

Important Information 

The value of investments, and the income derived from them, can go down as well as up and you can get back less than you originally invested. 

Prevailing tax rates and reliefs are dependent on your individual circumstances and are subject to change. This email does not constitute a personal recommendation to invest. 

Advice in relation to Trusts and Tax and Inheritance Tax Planning is not regulated by the Financial Conduct Authority. However, the products used in relation to Trusts and to mitigate Tax and Inheritance Tax may be regulated. Please note we do not provide tax advice. EIS should be regarded as higher risk investments. They are potentially longer term and less liquid and investors may have difficulties in selling their investment.