The Chancellor spoke about a “future full of change, full of challenge and, above all, a future full of new opportunities”, promising investment in infrastructure, technology and measures to encourage house building.
However the headlines have focused on the downgrade in growth forecasts. Although current tax revenues are better than originally forecast, the reduction in growth forecasts will mean lower tax revenues in the next few years which limited the Chancellor’s room to ease austerity.
The uncertain economic and political situation meant that the Chancellor had to avoid the problems he faced following his March budget so there were very few major announcements. It may be remembered more for what he did not do rather than what he did announce. There had been speculation that the VAT threshold would be reduced, but fortunately this has not happened. Similarly the March budget change to the self-employed national insurance rate has been shelved.
As always there will be important detail in the Budget small print, but the headlines are:
| The Economy | · The economy continues to grow with three million new jobs created since 2010.
· Inflation to peak at 3% this quarter before falling back · Productivity continues to be weak and growth forecasts have been revised downwards. |
| Personal tax | · The income tax personal allowance to increase to £11,850 from April 2018
· The higher rate threshold to increase to £46,350 from April 2018 · The tax-free dividend allowance will be reduced to £2,000 from April 2018 · Annual ISA allowance unchanged at £20,000 |
| Business tax | · Corporation tax rate for 2018/19 unchanged at 19%
· From April 2019 royalty payments to low-tax jurisdictions will be liable to income tax · R&D tax credit rate increased to 12% · Investment Investment Scheme (EIS) limits doubled for investments in knowledge intensice-companies |
| VAT | · No change to the £85,000 VAT threshold for next two years |
| Other taxes | · Extension to business rate reliefs for small businesses, including small public houses
· No Stamp Duty land Tax on purchases by first time buyers up to £300,000. |
| Spending / Investment | · £44bn to be made available in capital funds, loans and guarantees to encourage house building
· Increase of £31bn in national productivity investment fund · More money for the NHS · Additional £10bn for capital investment in the NHS · £500m investment in 5G, fibre broadband and AI |
| Other | · National living wage increased to £7.83 from April 2018
· Seven day waiting period for universal credit removed · Changes to planning legislation to encourage house building |