If you were a betting person, you would not have favoured the odds of Philip Hammond referring to Jeremy Clarkson in the Autumn Budget. And for those of you who are not petrol heads, the BBC’s latest David Attenborough documentary, Blue Planet II also received a nod.
The themes in this Autumn Budget are not dissimilar to those before – they include investment in research and development, supporting small businesses and house building.
The bit with the “long, economicky words”
The Chancellor kicked off proceedings in his words with the “long, economicky words” and the Office of Budget Responsibility’s (OBR) forecasts. The picture was not a rosy one despite the Chancellor’s high jinks. It is clear the OBR are forecasting choppy waters ahead with GDP forecasts revised downwards. GDP is to reduce by 1.5% in 2017, 1.4% in 2018, 1.3% in 2019-20 rising to 1.6% in 2022.
Much was made of the level of borrowing being the lowest it has been for some time and lower than had been predicted in the Spring. It is forecast at £49.9 billion, £8.9 billion less than previous forecasts.
Inflation is set to peak at 3% this quarter before falling to the 2% target over the next year.
The big headline – SDLT and first-time buyers
The newspaper headlines will surely focus on the immediate abolition of Stamp Duty Land Tax (SDLT) for all first time buyers.
For those purchasing properties up to the value of £500,000, no SDLT will be payable on the first £300,000 and 5% SLDT will be payable on the remainder up to £500,000.
Planes, trains and automobiles
Those aged between 26 and 30 will continue to receive one-third off rail fares, dubbed by the press as the ‘Millennial Railcard’. Those savings will now go further in wine bars and pubs across the country because duties on alcoholic drinks, save for low-quality drinks (white cider), have been frozen.
Driverless cars got a mention in the same breath as Jeremy Clarkson, much to the amusement of the House of Commons. Investment in electric and driverless vehicles continues at a pace with further investment of £400 million in charging infrastructure. For those employers who provide electric charging points for employee’s cars, these will not be considered a taxable benefit. A result for Tesla drivers!
Diesel cars that do not meet air quality standards will be hit by an additional tax from April 2018. For the avoidance of doubt, this does not apply to vans or lorries.
The future – R&D, plastics and infrastructure
For those of you who have seen the latest series of Blue Planet II, the damage that plastic is doing to our oceans is pretty grim watching. This has obviously struck a chord with the government who propose to “investigate how the tax system and charges on single use plastic items can reduce waste”.
Research and development (R&D) tax credits have increased to 12% from 10% and investment into 5G and broadband continues with £500 million earmarked for these projects.
Income tax, National Living Wage and small businesses
The basic rate of income tax will rise to £11,850 and the higher rate to £46,350 with effect from 6 April 2018. The National Living Wage will also rise by 4.4% to £7.83 an hour from the current rate of £7.50.
As with previous Budgets, there was significant focus on small businesses and supporting their growth. The VAT threshold will remain at £85,000 and the uplifting of business rates based on consumer price index (CPI) and not retail price index (RPI) is to be brought forward by two years.
Behind the headlines
There was some detail about Enterprise Investment Schemes (EIS) and Venture Capital Trusts (VCT) – more specifically doubling the investment limit for knowledge companies but the Chancellor gave a warning that this was not for the purposes of sheltering gains in low-risk ventures.
Landlords, property developers and empty properties
There was also a promise of up to £44 billion being set aside for the building of homes in the future to deal with the housing shortage and with the aim of encouraging smaller property developers. The government will also consult on barriers to longer-term tenancies for the private rental market. The aim is to encourage landlords to offer tenants “extra security”.
Local authorities will be able to charge up to 100% premium on council tax for empty homes and flats which is aimed at targeting the so-called ‘buy-to-leave’ landlords.
So all in all, the Chancellor’s second Budget was focused on housing and infrastructure but the elephant in the House was Brexit. Overshadowing the big announcements was the downgraded GDP forecast and only time will tell whether Mr Hammond’s next instalment, if he remains at No.11, will paint a rosier picture.