The Chancellor Philip Hammond has presented his first Autumn Budget. While the headlines centred on the virtual abolition of Stamp Duty Land Tax for first-time buyers, there was plenty in the financial proposals that will affect you. Here we round up the key points you should be aware of.
The good news is that all workers will pay slightly less tax from next April, unless you live in Scotland.
The Chancellor announced in the Budget that the amount you can earn without paying any income tax – known as the personal allowance – will rise £350 to £11,850 from April 2018.
That’s worth an extra £70 a year to basic rate taxpayers.
Meanwhile the higher rate threshold – the level at which people start paying tax at 40% – will climb from £45,000 to £46,350.
That will give higher-rate taxpayers an extra £240 a year.
Workers in Scotland won’t know about their personal allowance until December.
That’s because Scottish Income tax is now set by the Scottish government, which is due to make its decision next month.
At present the personal allowance for people who live in Scotland is £11,500, the same as the rest of the country.
But the level at which higher 40% tax falls due was frozen in Scotland last year leaving it at £43,000.
Booze and cigarettes
The duty on most booze has been frozen, apart from an increase in duty on high-strength white ciders.
The Chancellor said freezing alcohol duty will mean a pint of beer will be 12p cheaper than it would have been if duty had risen by inflation, while a bottle of whisky will be £1.15 cheaper.
Meanwhile the price of 20 cigarettes will climb by 28p while 30g of rolling tobacco will go up by 41p.
Drivers will welcome the news that the planned April 2018 fuel duty rise for petrol and diesel cars has been scrapped.
But the Chancellor announced a one-off tax on new diesel cars that do not meet the latest emissions standards.
It means from April 2018, first year rate vehicle excise duty (VED) for for the least green diesel cars will increase by one band.
VED is based on a vehicle’s CO2 emissions and the cost for the first 12 months ranges from zero to £2,000.
The tax hike will not apply to diesel vans.
The state pension will climb from next April by 3% to £125.95 a week.
Meanwhile, those people eligible for the new state pension will see it increase from £159.55 to £164.35 a week.
Annual increases in the state pension are covered by the so-called triple lock guarantee, which ensures that it climbs each year by either September’s Consumer Prices Index (CPI) inflation figure, average wage growth or 2.5% – whichever is highest.
For next April’s increase, the September 2017 inflation rate of 3% was used to dictate the level the pension would increase.
There have long been calls for reform of Stamp Duty, the tax that all homebuyers have to pay when buying a property.
So there was much celebration of the Chancellor’s announcement that Stamp Duty will effectively be abolished for first-time buyers.
Scrapping the tax for the first £300,000 spent by first-time buyers will save them up to £5,000.
But it’s Londoners buying a small home right now – worth £500,000 or less – that are set to benefit the most.
By comparison an average first-time buyer in East Anglia could save just over £1,600, while someone in Humberside buying an average home would gain just £300.
But there’s no relief for people buying properties worth more than £500,000.
However if you’re not already in the process of buying a property you may not feel much benefit as the net effect of the change will see house prices rising, according to the Office for Budget Responsibility. says: “The consequence of introducing the relief will be to increase house prices.
It warned: “The main gainers from the policy are people who already own property, not the first-time buyers themselves.”
Some first-time buyers will be able to buy properties they couldn’t otherwise afford, but “more expensively”, the OBR said.
Other changes to be aware of
- A new Millennials’ railcard is being introduced offering discounts to those aged between 26 and 30.
- The National Living Wage will rise in April 2018 by 4.4%, climbing from £7.50 an hour to £7.83.
- Air Passenger Duty has been frozen for most passengers but those flying first class and in private jets should expect to pay more.
- Anyone with an empty property will face in increase in their Council Tax. The premium that councils can charge owners of empty homes – that have been unoccupied and unfurnished for two years or more – will increase from 50% tom 100% of the property’s council tax.
- The government is considering a crackdown on contractors and freelancers who set up as limited companies to avoid PAYE tax and National Insurance contributions. Details are included in the Autumn Budget policy paper. It states: “The government will carefully consult on how to tackle non-compliance in the private sector, drawing on the experience of the public sector reforms, including through external research already commissioned by the government and due to be published in 2018.”
- For small businesses the VAT threshold will remain at £85,000 for two more years.