Autumn Budget 2017 explained
What the changes could mean for you
How could the Autumn Budget affect your finances? Read our summary of the headline changes for property, investments and tax.
Browse the key topics below.
Helping someone onto the property ladder? In the Autumn Budget, the Chancellor announced a cut in stamp duty for first-time buyers. Under the change, coming into effect immediately, first-time buyers will pay no tax on properties up to £300,000, and those buying properties valued at up to £500,000 will only pay stamp duty over the £300,000 threshold.
“This may just encourage the bank of mum and dad to help out more, safe in the knowledge that their cash is not going to the Treasury,” says Lucian Cook, Head of Savills Residential Research.
The system for Scotland is different, and the change does not apply.
The Chancellor has committed to a new housebuilding drive, pledging at least £44bn over the next five years. The aim is to ensure an average of 300,000 new homes a year are built by the mid-2020s.
“This announcement starts addressing some of the challenges in our housing market and the focus on improving supply of new homes is welcome,” says Stephen Jones, Chief Executive of UK Finance.
Another measure that could affect your property plans is a change to the way that corporation tax is calculated on capital gains, on properties for landlords who have set up as business enterprises.
The Chancellor announced a freeze on indexation – a tax relief which effectively gives relief for inflation by allowing gains to be reduced based on length of property ownership. Gains by businesses, including incorporated landlords, are taxed at the general rate of corporation tax. Essentially, the freeze means these landlords may receive less tax relief on gains from 2018 onwards.
Positive news for income tax; the Chancellor announced both the higher-rate tax threshold and the Personal Allowance will continue to rise in line with inflation.
The higher-rate tax threshold, above which your income is taxed at 40%, will rise from £45,000 to £46,350 in April 2018. At the same time, the Personal Allowance, or the amount you can earn before paying any income tax, will rise from £11,500 to £11,850.
However, if you earn more than £100,000, your Personal Allowance goes down by £1 for every £2 that your adjusted net income is above £100,000. This means your allowance is zero if your income is £123,700 or above from April 2018. Different income tax bands may apply to your income if you live in Scotland.
The increases are part of the government’s commitment to raise the higher-rate tax threshold to £50,000 and Personal Allowance to £12,500 by 2020.
A raft of measures to make electric car ownership more enticing are on the way – in a move that the Chancellor said is about embracing the future.
“Our future vehicles will be driverless, but they’ll be electric first,” he said.
The measures include £400m on a new charging-infrastructure fund, a boost of £100m for plug-in car grants and £40m for research. Plus, for those who charge electric vehicles at work, there will be no benefit in kind charge from April 2018.
The government has announced it wants to see driverless cars without a human operator on UK roads by 2021. To do so, it will implement changes to the regulatory framework, including setting out how to test the cars without human safety operators and launching an innovation prize to determine how future roadbuilding should be adapted.
Learn about how to invest in the rise of electric cars here.
In a motorist-friendly move, the Chancellor has cancelled the planned fuel duty rises for petrol and diesel. Owners of new diesel cars could face a one-off tax increase, however.
The Chancellor announced that new diesel cars, registered from 1 April 2018, that do not meet emissions standards will have increased vehicle excise duty for their first year. “Drivers buying a new car will be able to avoid this charge as soon as manufacturers bring forward the next-generation cleaner diesels that we all want to see,” he said.
Meanwhile, the existing diesel supplement in company car tax will rise from 3% to 4% in April 2018 for cars that do not meet the emission standards.
If you’re a sophisticated investor, the Chancellor announced a tax relief change that could affect you.
Tax relief will be doubled for people investing in ‘knowledge intensive’ companies through the Enterprise Investment Scheme (EIS). The scheme is a series of UK tax reliefs designed to encourage greater levels of investment in small, innovative companies. However, rules will be tightened to prevent investors using it for low-risk assets.
The current annual investment limit that EIS investors can claim relief on is £1m, and investors receive 30% tax relief on those investments.
Remember that the value of investments can fall as well as rise. The value of investments in smaller companies such as those qualifying for EIS are likely to be more volatile than others. You may not get back what you invest. If you’re not sure about investing, seek independent advice.
If you have children or know of other young people who use the train network, there was good news for them in the Autumn Budget.
In a bid to support millennials, the Chancellor announced the extension of the 16-25 railcard to include anyone up to the age of 30. This would bring about 4.5m more people into the scheme, the Chancellor said. For £30 per year, the railcard offers a 33% discount on rail travel at non-peak times. Following a trial in the Greater Anglia area next month, the card will be rolled out nationally next spring.
Remember that the effects of tax rules on you will depend on your individual circumstances and are subject to change. Barclays is not a tax adviser and we do not provide personal tax advice.
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