Updates

Autumn Budget 2017- what it means for you!

Last Wednesday (22nd November) marked the first Autumn Budget by Chancellor of the Exchequer Philip Hammond. The Budget used to be in the Spring, (with Autumn Statements in November), but Mr Hammond announced last year he would instead deliver the Budget in the Autumn, giving MPs longer to scrutinise the Budget before the new tax year starts in the following April.

Here are some key pension, savings and personal taxation changes that might affect you…

Pensions

  • Once again, there were no cuts to current levels of pension tax relief
  • The lifetime allowance for pension savings will increase in line with the Consumer Price Index (CPI) inflation rate of 3% as previously promised, rising from £1million at present to £1,030,000 in the 2018-19 tax year
  • The state pension will also be increased by the CPI figure of 3% under the triple lock – the popular policy that means annual rises in the state pension are decided by whatever is the highest of price inflation, average earnings growth or 2.5%. This means the basic state pension will rise by £3.65 a week to £125.95, while the full new state pension will go up by £4.80 a week to £164.35

Savings

  • Although not specifically relating to the Budget announcements, November’s interest rate increase from 0.25% to 0.5% may have been small, but it marked the first rise in borrowing costs for a decade. Many mortgages have risen in costs, but savers can look forward to better returns as banks and building societies pass on the rate rise in full, although we haven’t seen much sign of this yet!
  • The ISA allowance limit will be maintained at £20,000 per annum

Personal Taxation

  • The tax-free personal allowance, currently £11,501, will rise to £11,850 in April 2018
  • The higher-rate tax threshold, currently £45,001, will increase to £46,350 in April 2018
  • Capital gains tax – no change. It’s still 10% for basic rate taxpayers and 20% for higher rate taxpayers, except on residential property where the rate will remain at 28%.
  • Entrepreneurs’ Relief continues with a tax rate of 10% for lifetime gains of £10 million per individual with 10% relief extended to individuals on private trading company shares held for over 3 years
  • Inheritance Tax – no change. Nil rate band remains frozen at £325,000 until 2021

Other

  • Stamp duty to be abolished immediately for first-time buyers purchasing properties worth up to £300,000. First time buyers will also pay stamp duty on the first £300,000 of the purchase price of properties priced at up to £500,000.
  • The National Living Wage for those over 25 will rise in April 2018 by 4.4%, from £7.50 an hour to £7.83 an hour
  • The National Minimum Wage will also increase from April 2018 as follows:
    • Apprentices – £3.70 per hour
    • 16 and 17 year olds – £4.20 per hour
    • 18 to 20 year olds – £5.90 per hour
    • 21 to 24 year olds – £7.38 per hour
  • No changes to the £85,000 VAT threshold for the next two years
  • Business Rates will rise by Consumer Price Index (CPI) from April 2018. Business rates currently rise by the Retail Price Index (RPI), a different way of measuring inflation which tends to be higher than the CPI
  • Business rates revaluations will take place every 3 years, rather than every 5 years, starting after the next revaluation, currently due in 2022
  • National Insurance contributions (NICs) – no change. Rates of 12.2% for employees and self-employed rates (Class 4 NICs) of 9%/2% from April 2018

If you are affected by anything mentioned in the Autumn Budget or simply would like more information, advice or support, please give us a call.

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