The first annual Autumn Budget presented to the House of Commons since 1996 was shrouded by political pressures, a narrow majority, gloomy economic forecasts and in-fighting amongst the Conservatives following the Brexit vote.
Autumn Budget 2017 had a very political feel about it especially with the determination to increase house-building and fix a broken housing market which the Prime Minister recently described as her ‘personal mission’.
Changes to the Tax system
As for changes to the tax system, there had been rumours beforehand about VAT thresholds being increased or even drastically reduced – but in the end, there was very little in the way of earthquake announcements. The low-hanging fruit for HMRC such as APR on farmhouses, BPR on AIM stocks and basic rate restrictions for pension contributions were ignored. The biggest announcement which certainly hit the headlines later concerned the Prime Minister’s personal mission and abolishing SDLT for first-time buyers up to £300,000 with a 5% charge thereafter (with no such relief available for purchases above £500,000).
However, even before the day was out critics were suggesting this would overheat the housing market at the bottom without providing the corresponding supply. On the topic of property, since April 2015 non-UK residents have been subject to UK CGT on the sale of UK residential properties and from April 2019 onwards this regime will apply to commercial property. The payment deadline of CGT on UK residential property will eventually be within 30 days of sale – the original planned introduction of this being April 2019, but is now being pushed back to 2020.
The Chancellor turned his attention to cars, another traditional subject for the Budget. A new angle was the enthusiasm for driverless cars and their development. To further encourage the use of electric cars there was an announcement to exempt from tax employer-provided electricity via charging points for employees’ electric or hybrid cars. Diesel drivers continued to bear the brunt of the government’s volte-face on such cars, with VED being increased for new diesel cars not meeting latest standards by one band in April 2018. The diesel supplement for company car benefits in kind will be increased from the current 3% to 4% from April 2018, though presumably the planned abolition of the supplement altogether in April 2021 remains unchanged?
Interesting proposals from Autumn Budget 2017
Some interesting proposals:
- From April 2018 to double the EIS limit which an individual may invest under EIS in a tax year from £1million to £2million provided any amount above £1million is invested in one or more knowledge-intensive companies
- To increase the R&D tax credit rate from 11% to 12% for large companies for expenditure incurred from 1 January 2018
- Allowing, from this month, the Married Couples’ Allowance to be claimed for deceased spouses and civil partners and backdated up to 4 years where the entitlement conditions are met.
- Looking into the possibility of allowing Entrepreneurs’ Relief for entrepreneurs whose holding falls below the 5% threshold due to the dilution of their holding for the purposes of raising funds for commercial purposes
- Plans were announced for investigating ways to extend the recent public sector reforms and intermediaries to the private sector
The income tax personal allowance has continued to increase, being set at £11,850 from April 2018 and the basic rate band increased to £34,500. This is except for Scotland who determine some of their own rates and bands and which will be announced in the Scottish Budget next month. The CGT annual exemption has increased to £11,700 from April 2018.
From a tax perspective not a particularly interesting budget, other matters were clearly more prominent in the Chancellor’s thinking this year.
Autumn Budget 2017 documents are available to view here.