The second Budget statement of 2017 had little surprises, with Chancellor Philip Hammond announcing modest increases to personal allowances and the higher rate threshold, as well as measures to cut stamp duty for first time buyers.
We’ve rounded up the surface-level changes, and will update with the details hidden in the paperwork shortly.
Here, Which? Money expert Jenny Ross explains the changes.
As anticipated, the Chancellor confirmed the personal allowance will rise from £11,500 to £11,850, putting the government on track to deliver on the manifesto commitment to increase the personal allowance to £12,500 by April 2020.
The higher-rate threshold will also rise for people living in England, Wales and Northern Ireland, from £45,000 to £46,350. The chancellor reiterated plans to increase the higher rate threshold to £50,000 by April 2020.
Scottish taxpayers will not have their rates and thresholds for 2018-19 confirmed until its budget statement in mid-December.
Currently, basic rate taxpayers have the same rates and thresholds, but higher rate taxpayers start paying the 40% rate at £43,000, rather than the £45,000 in the rest of the UK.
Stamp Duty and property taxes
In a boon for people trying to get on the property ladder, the chancellor announced stamp duty will be lifted for first-time buyers purchasing properties worth up to £300,000. In London, first time buyers will have stamp duty waived on the first £300,000 of the property, providing the property costs less than £500,000.
This could potentially save buyers £5,000 in stamp duty, though it’s possible these savings will simply result in buyers paying more.
Council taxes could potentially also rise for second home owners, with the chancellor announcing local authorities will gain the right to charge double to owners of empty properties.
Rates for employees and self employed workers won’t be changing – but the thresholds will. Currently, employees pay 12% National Insurance between £8,164 and £45,000. This will change to between £8,424 and £46,350. Above this, they’ll pay 2%.
Self-employed workers will pay 9% on profits between £8,424 and £46,350, and 2% on anything more. They have the option to make voluntary ‘Class 2’ contributions of £2.95 (currently £2.85) per week on earnings above £6,250, which will entitle them to some state benefits.
Capital gains tax, savings and dividend taxes
No changes were announced on capital gains, or taxes on savings or dividends, though plans to cut the dividend allowance from £5,000 to £2,000 remain in place.
For most assets, basic-rate taxpayers will continue to pay 10% capital gains taxes and higher- and additional-rate taxpayers will pay 20%. The only exception is property – where rates remain 18% and 28% respectively. The capital gains allowance will rise from £11,300 to £11,700.
There were no changes to the savings allowance, meaning basic rate taxpayers can still earn £1,000 savings interest before paying any tax. For higher-rate taxpayers the allowance is £500.
No changes were announced for inheritance tax. As such, the inheritance tax threshold will remain at £325,000, and the additional property allowance will increase from £100,000 to £125,000 as planned in April 2018.
The Chancellor announced a freeze on duties for drinks bought in pubs. Following a consultation, duty will be increased on cheap, strong “white ciders” from 2019.
Duty on tobacco will increase as planned, with hikes of inflation (RPI) + 2% for cigarettes, and RPI+3% for hand rolling tobacco.
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