Philip Hammond has delivered his second Budget as chancellor. Here are the key points of his speech.
Autumn Budget 2017:
Stamp duty and housing
- 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 buyers will be exempt from stamp duty
- 95% of all first-time buyers will benefit, with 80% not paying stamp duty
- Long-term goal to build 300,000 homes a year by the mid-2020s
- £44bn in government support, including capital funding and loan guarantees, to boost house building
- 100% council tax premium to be levied on empty properties
- Compulsory purchase of land banked by developers for financial reasons
- Review into delays in developments given planning permission being taken forward
- £28m for Kensington and Chelsea council to provide counselling services and mental health support for victims of the Grenfell fire and for regeneration of surrounding area
- New homelessness task force.
Alcohol, tobacco, gambling and fuel
- 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 hand-rolling tobacco will increase by additional 1%
- Duty on beer, wine, spirits and most ciders will be frozen, but duty on high-strength “white ciders” to be increased via new legislation
- Fuel duty rise for petrol and diesel cars scheduled for April 2018 scrapped
- Vehicle excise duty for diesel cars that do not meet latest standards to rise by one band in April 2018
- Tax hike will not apply to van owners
- Existing diesel supplement in company car tax to rise by 1%
- Proceeds to fund a new £220m clean air fund.
Personal taxation and wages
- 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
- National Living Wage to rise in April 2018 by 4.4%, from £7.50 an hour to £7.83.
The state of the 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
- £3bn to be set aside over next two years to prepare UK for every possible outcome as it leaves EU.
The state of the 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.
Pensions, savings and welfare
- £1.5bn package to “address concerns” about the delivery of universal credit
- Seven-day initial waiting period for processing of claims to be scrapped
- Claimants to get one month’s payment within five days of applying
- Repayment period for advances to increase from six to 12 months.
- New universal credit claimants in receipt of housing benefit to continue to receive it for two weeks.
- VAT threshold for small business to remain at £85,000 for two years
- £500m support for 5G mobile networks, fibre broadband and artificial intelligence
- £540m to support the growth of electric cars, including more charging points
- A further £2.3bn allocated for investment in research and development
- Rises in business rates to be pegged to CPI measure of inflation, not higher RPI
- Digital economy royalties relating to UK sales which are paid to a low-tax jurisdiction to be subject to income tax as part of tax avoidance clampdown. Expected to raise about £200m a year.
Education (England only)
- £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
- Secondary schools and sixth-form colleges to get £600 for each new pupil taking maths or further maths at A-level or core maths at an expected cost of £177m.
- £320m to be invested in former Redcar steelworks site
- Second devolution deal for the West Midlands
- £1.7bn transport fund for city regions to be spent by mayors
- £2bn for Scottish government, £1.2bn for Welsh government and £650m for Northern Ireland executive
- Scottish police and fire services to get refunds on VAT from April 2018
- Young person’s railcard extended to 26-30-year-olds.
Health and social care
- £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.
In our next blog post, we’ll be exploring the impact that the planned stamp duty and housing changes will have on the property market. Coming soon…