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Today the Chancellor announced the latest Budget, describing it as aiming to “help families to cope with the cost of living”. The headline item was a reform of stamp duty for first time buyers, immediately removing the duty on properties up to £300,000, although analysts said that this would primarily benefit existing homeowners. Income tax rates were adjusted, with an increase of £350 for the personal allowance and an increase of £1,350 to the higher tax rate.
Budget 2017 : The Key Points
- Growth forecast for 2017 downgraded from 2% to 1.5%
- Stamp duty to be abolished immediately for first-time buyers purchasing properties worth up to £300,000
- Higher-rate tax threshold to increase to £46,350
- Tax-free personal allowance on income tax to rise to £11,850 in April 2018
- Fuel duty rise for petrol and diesel cars scheduled for April 2018 scrapped
Budget 2017 : In more detail
Growth
UK growth forecasts were cut following a deterioration in productivity growth, business investment and GDP growth. The annual rate of CPI inflation was also forecast to fall from a high of 3% towards the 2% target by the end of the year.
- Forecast of 1.5% growth for 2017, down from 2.0% in March.
- Outer year forecasts expect a further drop to 1.3% by 2020, returning to 1.5% in 2021
- Previous forecasts were 1.6% for 2018, then 1.7% in 2019, 1.9% in 2020, and 2% in 2021.
Borrowing
- Annual borrowing figures were more positive, forecast to be £8.4bn lower than the March estimate, and expected to fall each year to £25.6bn in 2022-23.
- Public sector net borrowing is forecast to fall from 3.8% of GDP last year to 2.4% this year, then 1.9%, 1.6%, 1.5% and 1.3% in subsequent years, reaching 1.1% in 2022-23.
- Debt will peak at 86.5% of GDP this year, then fall to 86.4% next year; then 86.1%, 83.1% and 79.3% in subsequent years, reaching 79.1% in 2022-23.
Personal tax allowances
- Tax-free personal allowance on income tax to rise to £11,850 in April 2018
- Higher-rate tax threshold to increase to £46,350
- Short-haul air passenger duty rates and long-haul economy rates to be frozen, paid for by an increase on premium-class tickets and on private jets.
Stamp Duty & Housing
- Stamp duty to be abolished immediately for first-time buyers purchasing properties worth up to £300,000
- £44bn in overall government support for housing to meet target of building 300,000 new homes a year by the middle of the next decade
- Councils given powers to charge 100% council tax premium on empty properties
- £400m to regenerate housing estates and £1.1bn to unlock strategic sites for development, as well as a review into planning permission delays for developments.
Duties
- Tobacco will continue to rise by 2% above Retail Price Index (RPI) inflation while the minimum excise duty on cigarettes introduced in March will also rise
- Duty on beer, wine, spirits and most ciders will be frozen, equating to 12p off a pint of beer and £1.15 off a bottle of whisky by next April
- Fuel duty rise for petrol and diesel cars scheduled for April 2018 will be scrapped
- Vehicle excise duty for diesel cars that do not meet latest standards to rise by one band in April 2018
- Existing diesel supplement in company car tax to rise by 1%.
Other budget announcements
Digital investment and Business
- VAT threshold for small business will remain at £85,000 for the next two years
- £500m support provided for 5G mobile networks, fibre broadband and artificial intelligence
- £540m to support the growth of electric cars, including more charging points
- Increases in business rates are to be linked to CPI measure of inflation, not higher RPI, a cut equivalent to £2.3bn
- Digital economy royalties relating to UK sales which are paid to a low-tax jurisdiction will be subject to income tax as part of a focus on tax avoidance.
Health
- £2.8bn in extra funding for the NHS in England
- £350m immediately to address pressures this winter, £1.6bn for 2018-19 and the remainder in 2019-20
- £10bn capital investment fund for hospitals up to 2022
Education
- £40m teacher training fund for underperforming schools in England. Worth £1,000 per teacher
- 8,000 new computer science teachers to be recruited at cost of £84m and new National Centre for Computing to be set up
- Secondary schools and sixth-form colleges to get £600 for each new pupil taking maths or further maths at A-level and core maths at an expected cost of £177m.
‘National living wage’
This will rise 4.4% to £7.83 an hour in April.
Welfare
Changes focused on a £1.5bn fund to address current operational issues with the universal credit rollout.
- Seven-day initial waiting period for processing of claims to be scrapped and typical first payments will be received in five weeks not six
- Claimants to get advance payments within five days of applying from January and the repayment period for advances will increase from six to 12 months.