Autumn Budget 2017: Summary points

The economy

• GDP growth for 2016 was 1.8% in aggregate and 1% on a per capita basis
• GDP growth is at 1.5% to Q3 of 2017 but forecast to fall over 2018 and 2019
• The OBR forecasts that global growth will be 3.6% in 2017 and 3.7% in 2018
• Unemployment has fallen to record lows since 1975
• Household spending is starting to grow again after stalling post-Brexit
• Business investment growth fell by 0.4% in 2016 and is expected to be moderate in 2017 at 2.5%, against an average of 4.9% between 2010 and 2015
• The deficit has fallen from 9.9% down to 2.3%, which is the lowest level since the 2008-09 crisis
• Productivity growth remains low at 0.1% since 2008, against an average of 2.1% in the decade prior
• Consumer Prices Index (CPI) inflation has risen from 0.9% in October 2016 to 3.0% in October this year and stands above the ten‑year average of 2.4%
• Government strategy is to reduce debt but support public services like the NHS while keeping taxes low
• OBR forecast is for government debt to peak at 86.5% of GDP in 2017-18 and then fall thereafter

Personal taxation

• The Personal Tax Allowance rises to £11,850 while the Higher Tax Rate (40%) rises to £46,350 from April 2018
• The National Living Wage rises from £7.50 to £7.83
• Stamp Duty to be abolished immediately for first-time buyers purchasing properties worth up to £300,000
• To help those in London and other expensive areas, the first £300,000 of the cost of a £500,000 purchase by all first-time home buyers will be exempt from Stamp Duty, with the remaining £200,000 incurring 5%
• No change in the ISA limit of £20,000, though the limit for Junior ISA’s and Child Trust Funds will increase to £4,260
• The lifetime allowance for pension savings will increase in line with CPI, rising to £1,030,000 for 2018-19
• All gains on non-resident disposals of UK property will be brought within the scope of UK tax; this will apply to gains accrued on or after April 2019
• Duty on wine/spirits/beer and some ciders will be frozen
• Rise on fuel duty has been cancelled
• No increase on Air Passenger Duty for short haul and long haul (economy) flights, these duties will be frozen at the 2018-19 rates
• Local authorities will be able to increase the council tax premium from 50% to 100% on empty homes
• Universal Credits have been overhauled to make claiming faster and extending advances of up to a month’s worth of Universal Credits via an interest-free advance
• New Railcard to be introduced for people aged 26 – 30 which will offer discounted rail travel
• Changes in reforming National Insurance Contributions have been delayed
• Assessment time limits for non-deliberate offshore tax non-compliance will be extended so that HMRC can assess at least 12 years of back taxes, without needing to establish deliberate non-compliance, following a consultation in spring 2018
• HMRC to use new technology to recover additional Self Assessment debts closer to real-time by adjusting the tax codes of individuals with Pay As You Earn (PAYE) income from April 2019

Business

• The VAT registration threshold remains unchanged at £85,000 for the next two years while the government conducts its review
• Business rates – businesses affected by the so-called staircase tax will be able to have their original rates bills reinstated, with the relief backdated. Also, there will be a more frequent valuation happening every three years instead of five
• Contractors working through limited companies will rejoice as there have been no changes within the private sector in terms of IR35. The government will consult on how to tackle non-compliance in the private sector, drawing on the experience of the public sector reforms
• There will be a doubling of the investment limits for the Enterprise Investment Scheme (EIS), though there was a warning that low-risk capital preservations should not benefit from EIS
• No business will be mandated to use Making Tax Digital (MTD) until April 2019 and then only those with turnover above the VAT threshold, and then only for VAT obligations. This scope will not be widened until April 2020, at the earliest
• For companies, the indexation allowance applied to capital gains will no longer apply after January 2018, and only gains up to that date will be protected from inflationary increases
• From April 2019, income tax will be applied on royalties paid by digital businesses to a low tax jurisdiction, even where they would not normally be subject to UK taxes under other existing measures
• HMRC to be given extended powers to hold online marketplaces “jointly and severally liable” for the unpaid VAT of all traders on their platforms

Those were the highlights from the 2017 Autumn Budget. There’s been some good news around business rates, IR35, Stamp Duty and the VAT registration threshold. If you have any questions about this Autumn Budget and how it could affect you, give us a call on +44 20 7759 7553 or email us on accounting@sableinternational.com. You can also leave a comment below and one of our experts will get back to you.