- 23rd November 2017
- Posted by: Suzy Hill
- Category: Budget News
Brearley & Co.Tax Manager, Andrew Cowe, gives his view on the tax changes in the Autumn 2017 Budget.
This has been as difficult a Budget upon which to comment as I can recall, at least from a taxation perspective, quite simply because there have been so few measures announced. In a sense this may be a good thing, because with a struggling economy, growth forecasts downgraded and Brexit looming ever larger, there was precious little ‘wiggle room’ for any significant changes.
In many ways this is a Budget more notable for what it didn’t contain, rather than what it did. In the weeks running up to the announcement there were hints that there could be rises in Capital Gains Tax, National Insurance for the self-employed, a widening of the VAT net and cuts to various tax reliefs on investments including pensions. Thankfully, none of these came to pass.
In terms of what was actually announced, there was an increase to the R&D tax credit, but only for ‘large companies’, as defined by the tax legislation. Countering the perception that this was the Conservatives ‘cosying up’ to big business at the expense of the ‘little people’, however, there was also a crackdown announced on multinationals diverting profits to lower tax jurisdictions. The ‘Google tax’, if you will.
The most eye catching announcement has to be the abolishment of Stamp Duty for first time buyers purchasing homes up to £300,000. It remains to be seen, however, whether this will actually help young people get on the housing ladder, or simply push up asking prices!
One piece of good news is that the personal allowance, i.e. how much an individual can receive before paying income tax, will be increased from £11,500 to £11,850 from April 2018, which is worth an extra £70 to a basic rate taxpayer. The plan remains to increase the allowance to £12,500 by 2020. In addition, the threshold at which an individual starts to pay the 40% higher rate is rising from £45,000 to £46,350, meaning that anyone earning over the latter figure will save a further £270 next year.
All in all then, a very ‘tax neutral’ Budget from a cautious Chancellor. It was always likely to be this way at present due to the uncertainties prevalent in the economy, and over what is to come politically. We obviously hope that this approach will serve the economy well, and put it in the right shape for the considerable challenges which lie ahead.