Budget 2017 - A rock & a hard place22 November 2017
We have recently written a blog about 2017 being a turning point in the economy, with the recent years of very low interest rates and inflation rates possibly becoming a thing of the past. We will post this in early December.
Today's Autumn Budget from the Chancellor, Philip Hammond MP, also marks a turning point in government plans. I am sure he would have wanted to go further, but the reality is that in the current climate, like balancing any budget, household, business or nation, economic constraints mean that the wiggle room for him to 'pull a rabbit out of the hat' was never really available. Rocks and hard places spring to mind, with even the most recent data from Britain's budget deficit released on Tuesday of this week showing an unexpected rise in public sector net borrowing in October. More on this can be found here: https://www.theguardian.com/business/2017/nov/21/widening-uk-budget-deficit-hands-hammond-a-headache
With borrowing higher than expected, and UK growth over the next five years revised down by the Office for Budget Responsibility (OBR), what are the financial headlines from this year's Autumn Budget?
Clearly, housebuilding for future generations will be the headline grabber, with £44BN funding to help will see a big physical change in the UK, and we have noted the stamp duty change below for first time buyers. But what are the other changes, or non-changes, of note?
- VAT threshold unchanged for two years from April 2018 at £85,000, although there will be consultations on changes after this period.
- Personal Allowance increases to £11,850 from April 2018
- Threshold at which higher rate income tax starts increases to £46,350 from April 2018
- No change to ISA allowance of £20,000 in the new tax year 2018/2019
- Stamp duty abolished on first time house purchases up to £300,000, and no stamp duty on the first £300,000 of a home worth up to £500,000 for first time buyers purchasing in expensive areas.
- Enterprise Investment Scheme (EIS) limits doubled for investment into 'knowledge intensive' companies.
- …and nothing on pensions tax relief, lifetime allowance or annual allowance...for now.
As always, the devil will be in the detail and we hope that, unlike last year, there will be no 'U-turns' after a week with mounted opposition from various areas.
Each one of us is likely to be affected by the Budget announcements in different ways and however you are affected, it's usually a good time to take stock and review your financial planning. No individual advice is provided during the course of this blog. Talk to the team at Chapters Financial to see how we can help.
Keith Churchouse FPFS
CFP Chartered FCSI
Chartered Financial Planner
Chapters Financial Limited is authorised and regulated by the Financial Conduct Authority, number 402899