Tax implications of the budget

PUBLISHED: 13:36 01 December 2017

Philip Hammond's budget was aimed at solving the housing crisis.

Philip Hammond's budget was aimed at solving the housing crisis.


The chancellor’s autumn budget delivered on November 22 focused very much on boosting the UK’s productivity and building greater self-sufficiency given the UK’s impending exit from the EU, states Jon Hook, from Norwich Accountancy Services.

Jon Hook, Norwich Accountancy ServicesJon Hook, Norwich Accountancy Services

Some of the changes announced are as follow. From April 2018, the personal tax free allowance will rise from £11,500 to £11,850 and the basic rate threshold (where the tax rate changes from 20 per cent to 40 per cent) will rise from £45,000 to £46,350.

Great news for first time buyers but not so for landlords (again!) – with immediate effect, no stamp duty on the first £300,000 of the purchase price (subject to a maximum purchase price of £500,000...As for landlords, yet another blow with the chancellor announcing new powers to local authorities to charge a 100 per cent council tax premium on empty properties! He will also launch a consultation on the barriers to longer tenancies in the private rented sector and hinted at seeking ways to encourage landlords to offer these types of tenancies.

For those involved in property development and construction, the government has said it is committing £44 billion of capital funding to support the housing market with loans and guarantees to boost construction skills and ‘unlock’ sites.

From April 2018, the national living wage will rise from £7.50 to £7.83 per hour.

From January 2018, corporate indexation of capital gains will be frozen bringing corporate and personal capital gains in line, creating a more level playing field.

The planned switch from the retail prices index (RPI) to the consumer prices index (CPI) in terms of calculating business rates relief will be brought forward two years to April 2018 which is estimated to save businesses £2.3 billion over the next five years. In terms of boosting innovation, the government announced it would allocate a further £2.3 billion for investment in Research and Development (R&D). It plans to fund an increase in the Research and Development tax credit to 12 per cent. It also wants to increase the number of UK tech businesses and is setting up a new ‘Regulators’ Pioneer Fund’ and is doubling the Enterprise investment Scheme (EIS) investment limits from £1m to £2m for knowledge intensive companies. The proposed fuel duty rise scheduled for April 2018 has been cancelled which is good news but not so for company cars using diesel which will incur a 1 per cent increase in company car tax from April (white van men and women don’t worry - you’re excluded!).

From April 2018, the Vehicle Excise Duty (VED) rate for diesel cars will go up by one band. In contrast, it would appear further incentives are on the way for electric cars including no benefits-in-kind for those charging up their electric cars at work!

…And finally, the chancellor has promised to keep the VAT threshold at £85,000 for the next two years which, in my opinion, is far too low as it simply increases the accounting and compliance costs to small businesses which are the backbone of our economy!

Jon Hook, managing director at Norwich Accountancy Services, sponsors of this column, is on 01603 630882 or www.norwichaccountancyservices.co.uk

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