The Chancellor of the Exchequer Philip Hammond has delivered the first Autumn Budget for 20 years. Accountants, business and financial advisers Kreston Reeves highlights Kent’s winners and losers.
For individuals and families
Comment from Clive Relf, a Partner in the Private Client Tax team at Kreston Reeves.
“With the Budget shifting from Spring to Autumn this year, the backdrop was one of falling leaves rather than daffodils. The Chancellor was relentlessly upbeat about the prospects for UK PLC irrespective of any Brexit related challenges.”
“One of the clear winners from today’s Budget is the UK housing market. First time buyers will benefit from the scrapping of Stamp Duty on homes up to £300,000, but those houses need to be available. Those buying with help from the bank of mum and dad will need to be careful – all joint purchasers will need to be first time buyers. There is also a risk that this measure will actually help increase house prices, pushing homes further out of reach.”
“The Chancellor would have also done well to remember that the housing market extends beyond first time buyers. Measures to help those wishing to move up the housing ladder would have been welcomed.
“The 100% council tax premium on empty homes may be a concern. It is unclear as to what constitutes an ‘empty home’ – would a holiday home count as an empty home.”
Individuals and families in Kent will also welcome the following:
The anticipated reduction in the VAT registration threshold didn’t happen, which is good news for those who use non registered suppliers and thereby avoid a 20% VAT charge.
Tax free allowances for all to increase next April from £11,500 to £11,850 making further progress towards the Government’s promise that we can all receive annual income of £12,500 tax free by 2020/21.
Fuel duty frozen yet again, but extra road tax payable for those buying new diesel cars and further “environment friendly” tax proposals to reduce plastic waste will hurt.
New discount Railcard for those aged between 26 and 30 from April 2018 at a cost of £30 p.a., will be available to 4.5 million, but is unlikely to help those commuting.
Comment from Laurence Parry, a Partner specialising in tax for businesses at Kreston Reeves.
“I have not witnessed a Budget speech with so little directly in it for businesses, particularly for those in our area; however, there may be some longer term changes for the knowledge economy that may well be of benefit.”
“Whilst there weren’t many headline measures, its always interesting to look at the bigger numbers in the Treasury’s Red Book. Here we see how the Budget actually will impact.
“The abolition of indexation allowance, an allowance for inflation on cost for companies when they sell an asset will save over £0.5bn pa. Changing business rates increases to CPI from RPI will also save in total £0.5bn pa.
“With concerns over our productivity rates increasingly high on the political agenda, and where we lag significantly behind our European colleagues, the introduction of a £7bn National Productivity Investment Fund is interesting. Yet we will not see anything until 2022/23, which begs the question why? If so important, it would make sense to have it earlier.”
To help understand the key implications small and medium sized businesses should know about Kreston Reeves has detailed the key items announced today.
We need to see the detail of how the help for SME builders will work. One of the biggest issues is that these builders often have difficulty in obtaining finance. The change to tax on liquidations in 2015 hit this sector hard as it created uncertainty as to the tax treatment on exit for investors. One of the biggest helps here would be for HMRC to give real guidance on how this rule affects this sector.
Supporting the knowledge based and tech business sector:
Spreadsheet Phil also made a big play on supporting the knowledge based and tech business sector. The speech itself gave little detail as to how this would filter down – there was much talk of plans and consultations, and public-private partnerships, but little concrete detail.
Change to the calculation of business rates:
There is a welcome change to the calculation of business rate increases (to the lower CPI rather than RPI), but the increase in business rates will now happen every three years, rather than five. This was presented as a benefit to business!