First budgets of a new parliament are traditionally the dramatic ones in which the Chancellor dispenses the unpalatable medicine of tax increases, because they are at the furthest point from the next election. However, for a variety of reasons, Mr Hammond did not follow the norm. Far from increasing the Exchequer’s income, the Budget Red Book reveals a net tax giveaway of just under £1.6 billion in the coming tax year.
His main headline-grabbing move was to give first time buyers an exemption from stamp duty land tax on the first £300,000 of consideration for properties worth up to £500,000. Some move on this front had been widely expected, and it accounts for over a third of the giveaway.
The Chancellor was less generous on the income tax front, increasing both the personal allowance and the higher rate threshold by 3% – the standard inflation-linked increase. He gave nothing away to individual savings account (ISA) investors, freezing the main ISA and lifetime ISA investment limits. Pension savers were luckier, with an increase in the lifetime allowance – the first since 2010 – and no changes to the annual allowance.
Venture capital schemes were again in the firing line, with a raft of measures designed to introduce a greater emphasis on risk investment to venture capital trusts, enterprise investment schemes and seed enterprise investment schemes. However, he took no action on inheritance tax business relief, which had been expected in some quarters.
If commentators suggest that this was a dull Budget, Mr Hammond will probably be pleased. After his national insurance U-turn following his March Budget, a steady-as-she-goes, broadly neutral Budget was likely to be his goal.
- First time buyers of residential property outside Scotland will pay no stamp duty land tax on the first £300,000 of the purchase price for a home, provided its value does not exceed £500,000.
- The personal allowance will rise to £11,850 and the higher rate tax threshold for the UK (excluding non-savings, non-dividend income in Scotland) will rise to £46,350 for 2018/19.
- The pension lifetime allowance will be increased from £1 million to £1.03 million from April 2018. There will be no change to the annual allowance.
- Venture capital trusts, enterprise investment schemes and seed enterprise investment schemes will be required to focus more on companies where there is a real investment risk.
- The diesel supplement for company cars will be increased from 3% to 4% from April 2018.
- Online marketplaces will become jointly and severally liable for unpaid VAT of UK traders as well as overseas traders.
- There will be several changes to business rates, notably dealing with the ‘staircase tax’ and introducing valuations every three years.