Budget 2017: our reaction and key highlights

by Iain Mason

Chancellor Philip Hammond’s second Budget had a few interesting announcements and some notable omissions.

Abolishing Stamp Duty Land Tax for first time buyers was a welcome surprise; a notable omission was his reported plan to reduce the threshold for VAT registration – which in fact he froze until 2020.

Richards Mathews CEO of Optimum Professional Services said of the Budget: “Good news for small businesses that the VAT registration threshold was not lowered. As always we need to see the detail but there were one or two pieces of welcome news, for example investment in electric vehicles and the well documented plastic tax. It was pleasing to hear Mr Hammond talk about SMEs as an important part of the economy.”

Mary Hoffman, Optimum’s Director of Legal Services, welcomed the news that Stamp Duty Land Tax will be removed for first-time buyers and said plans to kickstart house building and construction would be good for the economy as a whole.

Here are the Budget’s key highlights

Stamp duty and housing:

• Stamp duty to be abolished immediately for first-time buyers purchasing properties worth up to £300,000. 95% of all first-time buyers will benefit, with 80% not paying stamp duty
• £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
• 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:

• Tobacco will continue to rise by 2% above Retail Price Index (RPI) inflation, equivalent to 28p on a pack of 20, 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 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 meeting latest standards to rise by one band in April 2018 – this will not apply to van owners
• Existing diesel supplement in company car tax to rise by 1%

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

Welfare and pensions:

• £1.5bn package to “address concerns” about the delivery of universal credit
• Seven-day initial waiting period for processing of claims to be scrapped

Business and digital:

• VAT threshold for small business to remain at £85,000 for two years
• £500m support for 5G mobile networks, full 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, a cut of £2.3bn
• 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
• Charges on single-use plastic items to be looked at
• £30m to develop digital skills distance learning courses