On Wednesday 22nd November 2017, Chancellor of the Exchequer Philip Hammond presented his second Budget to the nation. The Budget speech was made in the House of Commons, and covers government spending for the months ahead, as well as changes to taxation. It’s an important part of the year for the governing party, and the decisions that have been made will inevitably affect all residents of the UK in one form or another.
As with all decisions made on such a large scale and with so many complicated aspects, some will inevitably benefit more than others. This year’s Budget appears to provide more assistance to young people, who have been hard hit by rising house prices and job instability following the recession. How will this budget affect you? We’ve broken down the main points below.
Providing a boost for first time buyers, the Chancellor has abolished stamp duty on homes worth up to £300,000. Previously, if you were to purchase a home for £300,000 you would need to pay £5,000 for stamp duty. This change means that first time buyers will need to save less money for the up-front costs of buying a home. This comes into effect straight away.
The Chancellor also announced £44bn in capital loans and funding guarantees to help build 300,000 new homes a year (on average by 2025). It is hoped that this will ease the pressure on house prices and make it easier for more people to get on the property ladder.
Unfortunately, very little was mentioned about the issue of high rents and substandard rental accommodation. Increasing the number of affordable houses and making it easier for people to save a deposit should make renting easier to move on from. The government also plan to launch a consultation to see how they can encourage landlords to offer longer tenancies to those who want more security in their rented property.
For car drivers, there have been a few announcements that may affect you. If you drive a diesel car which doesn’t meet the latest emissions standards, your car tax (VED) rate will go up by one price band. For those going from price band K to price band L, for instance, that would mean a rise of £205 per year at the current figures. This will only affect cars – not vans or lorries – and is due to come into effect in April 2018. The proceeds from these tax hikes will fund a new £220m clean air fund, to ensure future generations have the most essential thing: breathable, healthy air.
The fuel duty rise which was scheduled for April 2018 has been scrapped, however, so while fuel prices may not go down, they are no longer due to rise in the spring which should make budgeting a little easier.
There’s good news for those who already drive, or who are planning on purchasing an electric vehicle. The Chancellor has announced a new £400m charging infrastructure fund, put £40m towards charging research and development, and plans to invest a further £100m in the Plug-In-Car Grant.
Rail travel is to be made cheaper for young people by the introduction of a 26 to 30 Railcard. Previously, once you reached 26-years-old you became ineligible for the Young Person’s Railcard and therefore the discount. It has not been confirmed exactly how much discount the new railcard will give, but it is thought to be an extension of the current offer for young people, which gives 1/3 off all rail fares.
Healthcare affects us all in one way or another, and many have been concerned about cuts to healthcare services in their local area over the past few years. With the problems experienced by over-stretched A&E departments last winter, the Chancellor has made £350m immediately available to the NHS to help address winter pressures this year.
He also announced £2.8bn extra funding for the NHS in England and a £10bn capital investment fund for hospitals, to ensure our healthcare services can keep up with modernisation and improvements in care. Wages for nurses are being reviewed and it is hoped that this will mean pay rises at some point in the future, although no direct promise was given.
Employment, Welfare & Wages
All working people are affected by the tax-free personal allowance on income tax. This is the amount you can earn in a year before you have to pay tax on those earnings. The allowance is rising to £11,850 up from £11,500 in April 2018. This means that you will only pay income tax on any earnings beyond £11,850. For those who earn enough to pay the higher tax rate, the threshold will increase to £46,350.
The National Living Wage will increase from £7.50 an hour to £7.83 an hour in April 2018. In his speech, the Chancellor stated that this will give full-time workers a £600 pay increase per year.
After concerns have been raised about issues with the new Universal Credit benefits system, the Chancellor has announced a £1.5bn package to help address the most pressing issues. Claimants will now get once month’s payment within five days of applying, the seven-day initial waiting period has been scrapped, and those in receipt of housing benefit will continue to be paid for two weeks after being moved on to Universal Credit. This will hopefully help many people to continue to meet their financial obligations as the system switches to the new Universal Credit model, but some say these measures do not go far enough.
Alcohol & Tobacco
It’s bad news for smokers, but good news for those who like the odd drink. Tobacco prices will continue to rise at 2% above RPI inflation (hand-rolling tobacco will increase by an additional 1%), and the minimum excise duty will also rise.
Beer, wine, spirits and most ciders have had their duty frozen. This is to support and help Britain’s pub industry and to ensure prices do not become too high. However, high-strength ‘white ciders’ will have their duty increased under new legislation which aims to protect those who buy very strong, very cheap alcohol.
Over the coming days, the government is expected to release more detailed information on today’s Budget. We hope this quick guide has given you an idea of how the new Budget will affect you, your family, your property and lives as we leave 2017 behind. More information about the Autumn Budget can be found on the official government website.