There were all kinds of fears for this budget in terms potential tinkering with pensions and trying to squeeze more tax revenue from the UK. However, it turned out to be a fairly uneventful and benign budget (thankfully).
Below is my take on the key points…
Stamp Duty Land Tax (SDLT)
- SDLT has reduced to zero for the first £300,000 of a property purchase (on purchase up to £500,000) for first time buyers in the hope that this will cut the cost of buying.
- Conversely, this may actually drive prices of houses up slightly, making it less of gain for first time buyers. However, it is at least an attempt to help first time buyers.
Income Tax
- From April 2018, the personal allowance will rise to £11,850 (a rise of £350)
- The higher rate threshold will rise to £46,350 (an increase of £1,350).
- However, the dividend allowance will be cut to £2,000.
- This will hit small and medium sized business owners who take their profits as a dividend. Employer pension contributions are likely to become an even more attractive way of extracting profits from a business.
Capital Gains Tax
- The annual exemption will increase by £400 to £11,700.
Pensions
- The pension lifetime allowance will rise to £1,030,000.
- The state pension will increase by 3% (CPI for September) in April 2018.
- There are no change to funding limits or tax treatments for, what feels like, the first budget in a long time!
Inheritance Tax (IHT)
- There were no changes announced for IHT.
Investments
- The ISA annual subscription limit will remain at £20,000.
- The annual subscription limit for Junior ISA’s will rise in line with CPI to £4,260.
Trusts
- There will be a consultation published in 2018 to consider the simplification and fairness of trust taxation.
If there is anything further that emerges from the fine detail, I will let you know. Otherwise, if you have any questions as to how this budget directly affects you please do get in contact.
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