The Chancellor of the Exchequer presented his Autumn Budget to Parliament on 22 November 2017. Our Director of Policy Steve Webb explains what this meant for your finances
The Budget is always a blizzard of announcements, and 2017’s was no exception. Royal London experts pored over the small print to find the five main things you need to know:
April 2018 saw a worthwhile boost for the lowest earners
For people on a low wage, April 2018 brought a welcome increase in the national living wage. The minimum hourly rate for those aged 25 or over rose by 4.4% from £7.50 to £7.83. In addition, the amount you could earn without paying tax rose from £11,500 to £11,850 in 2018/19, though this increase simply kept pace with inflation. Those dependent on the new Universal Credit benefit no longer had to wait seven days before their entitlement to the benefit begins, and those who struggled to wait a month or more for their first payment found it easier to get an advance payment.
First-time buyers found it slightly easier to buy a house
One of the many costs associated with buying a house is ‘stamp duty land tax’. Previously, this was charged on property purchases worth over £125,000, with higher rates applying if your property purchase was over £250,000, and higher rates still for more expensive properties. The Chancellor announced two changes designed to help first-time buyers in England, Wales and Northern Ireland:
- Any first-time buyer looking to purchase a property worth under £300,000 will pay no stamp duty.
- First-time buyers looking at properties worth between £300,000 and £500,000, will pay no stamp duty on the first £300,000. This helped to remove one of the many barriers to younger people being able to afford to buy a first home.
Drivers and those who like a tipple gained, but smokers lost out
Every year the Chancellor has to decide what to do with taxes on things like petrol, alcohol and tobacco. With inflation running at 3% at the time, he would have needed to increase these duties by 3% simply to ‘stand still’ in terms of the public finances. In 2017, he was relatively generous, freezing duty on petrol, beer, wine and spirits. The main losers were smokers, who saw the duty on cigarettes increase by 2% over and above inflation.
The economic outlook was gloomy
The Chancellor has to forecast how fast the economy will grow in each of the coming years, and the figures he published in the 2017 Autumn Budget were much more gloomy than those he published in March 2017. It was expected that the economy would grow by less than 2% per year for each of the next five years (a much slower rate of growth than we had been used to).
We can expect more taxes to protect the environment in the future
The Chancellor announced a new increased rate of vehicle excise duty for those who bought a diesel car after April 2018, and increased taxation on those who have company cars that run on diesel. He also planned to bring in a new tax to reduce the use of plastic, for example, in ‘single-use’ containers, but nothing will change very soon – the Chancellor simply announced a ‘call for evidence’ on the idea to take place in 2018.
You can access the 2017 Autumn Budget in full here.
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