Brearley &Co. Tax Manager, Andrew Cowe presents our summary of Chancellor Philip Hammond’s Budget speech.

As Budgets go, there was not much, from a taxation perspective, which stood out from the Chancellor’s speech today.  This was to be expected, as there was very little scope for tax reductions (or increased spending), whilst any increases would have politically very sensitive.  As such the conclusion is very much ‘as you were’, however as always, ‘the devil’s in the detail’!  The main features of the Budget are summarised in ‘Bullet Point’ format below, and we will have further comment once everything has been analysed in greater detail.

Stamp duty and 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 2025
• Councils given the power to double council tax where properties are left empty
• Legislation to provide for the compulsory purchase of land banked by developers for financial reasons
• £400m to regenerate housing estates and £1.1bn to unlock strategic sites for development
• Review into delays in developments given planning permission being taken forward
• New homelessness task force

Alcohol, tobacco and fuel

• Tax on tobacco to continue to rise by 2% above inflation
• This means an increase of 28p on a pack of 20.
• Minimum excise duty on cigarettes will also rise
• Duty on hand-rolled tobacco increasing by 1%
• Duty on beer, wine, spirits and most ciders frozen, the equivalent of 12p off a pint of beer and £1.15 off a bottle of whisk
• Duty on high-strength “white ciders” to be increased in 2019 via new legislation
• Fuel duty rise for petrol and diesel cars scheduled for April 2018 scrapped
• Vehicle excise duty for new diesel cars (not vans) not meeting latest standards to rise by one band in April 2018

Taxation and wages

• Income tax – basic rate 20%, higher rate 40%, additional rate 45%
• Tax-free personal allowance on income tax to rise to £11,850 in April 2018, and to £12,500 by 2020
• Higher-rate tax threshold to increase to £46,350
• Corporation tax to reduce to 17% from 2020
• Capital Gains Tax annual allowance to rise to £11,700 from next April
• 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
• Existing diesel supplement in company car tax to rise by 1%
• VAT threshold for small business to remain at £85,000 for two years
• National Living Wage to rise in April 2018 by 4.4%, from £7.50 an hour to £7.83.

Economy

• Growth forecast for 2017 downgraded from 2% to 1.5%
• GDP downgraded to 1.4%, 1.3% and 1.5% in subsequent years before rising to 1.6% in 2021-22
• Productivity growth and business investment also revised down
• Annual rate of CPI inflation forecast to fall from peak of 3% towards 2% target later this year
• Another 600,000 people forecast to be in work by 2022

Public finances

• Annual borrowing £49.9bn this year, £8.4bn lower than forecast in March
• Borrowing forecast to fall in every subsequent year from £39.5bn in 2018-19 to £25.6bn in 2022-23
• Public sector net borrowing 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.