Autumn Budget 2017: A balanced approach? Or tinkering around the edges?

Chris DowningDirector, Inspire Professional Services Ltd

The first Autumn Budget! With many commentators predicting a dull budget, we took time out of our 2017 conference to watch the Chancellor’s speech. With the summer election result still raw, there was pressure on the chancellor to deliver something for public sector workers and young people, whilst dealing with the unknown of the Brexit divorce bill.

In summary, it seemed as though lots of extra investment went into boosting productivity. This was likely due to the lower than expected GDP figures, which were actually 25% lower than in the March budget, quite a change in 6 months. Apart from a minimum wage increase, most announcements were targeted to specific sectors.

Below we have summarised the key points to highlight the changes of key note:

The economy

  • The major news is that growth figures are down – to 1.5% for 2017, 1.4% (2018), 1.3% (2019), 1.5% (2020) and 1.6% (2021).
  • Brexit has cost £700m, with a further £3bn set aside for dealing with the split. No announcements in respect of the Divorce bill.
  • The public debt will be at its highest this year and fall in future years. 86.5% of GDP this year, falling to 79.1% in in 2022/23, with most reductions coming towards the end of the 5 year period.
  • The year on year deficit, £49.9bn for this year, £39.5bn for 2018 and £25.6bn for 2019.
  • Infrastructure announcements for the rest of the UK, outside of London.

Tax and VAT changes

  • Personal allowance up to £11,850 from April 2018, in line with previous announcements.
  • Higher rate tax thresholds to £46,350 from April 2018, again already announced.
  • National Minimum Wage – £7.50 to £7.83 from April 2018.
  • Limits for EIS investments to be raised to encourage investment in technology companies.
  • R&D tax credit refunds increased to 12% from 11% on cash surrendered.
  • No VAT limit changes.
  • VAT charges on online purchases to rise to sound a warning to online retailers such as Amazon etc.

Property Sector changes

  • No Stamp Duty for first time buyers up to £300k.
  • Power to local councils for 100% rise in council tax on empty properties.
  • £8bn of funds for providing guarantees to smaller home builders to stimulate building, with our targeted measures.

Motoring

  • No rise in fuel or alcohol duty generally (with a few targeted exceptions)
  • Diesel cars to be targeted with a 1% charge on VED
  • Driverless cars to be tested.
  • Increased spend of £400m on charging points
  • No tax charge on charging your car at work

Thank you for reading our summary, if you have any questions please get in touch.

Chris Downing
Director