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Budget 2017: What you need to know

This was the first Budget held in the Autumn since 1996. It was solid if unsurprising with a strong emphasis on technological investment and on housing, perhaps to deflect from poor growth and productivity forecasts.

There were the usual uplifts to personal allowances and tax thresholds, and news of quicker access to funds for Universal Credit applicants, in what represented a safe budget with very few giveaways.

Many small businesses will be relieved that the VAT threshold remains at £85,000 for the next two years despite pressure for it to be lowered.  

To tackle online VAT evasion HMRC will extend new rules to online market places such as eBay and Amazon to make them jointly liable with all traders (including UK traders) in instances where they should have known that the business should be registered for VAT in the UK.

The decision to change the annual uprating of business rates in England from the Retail Prices Index to the, usually lower, Consumer Price Index from April 2018, two years earlier than planned, will be welcomed. Although most had hoped that the uprating would be scrapped altogether for one year.

The Chancellor announced the current EIS investment limit will double from £1m to 2m per year for people investing in knowledge-intensive companies. This is forecast to unlock an additional £7billion of growth investment.

A myriad of changes have been introduced to solve the housing crisis with particular emphasis on creating new homes, making homes affordable, and the elimination of rough sleeping by 2022.

Certain housing developments will offer first time buyers a discount to acquire new builds. First time buyers will also be supported with the first £300k of the purchase price being exempt from stamp duty land tax (“SDLT”) but restricted to properties costing less than £500k. A tax saving of up to £5k is good news but with the first £125k being exempt from SDLT anyway, this will be of greater benefit in London and the South East where house prices at the lower end of the market still cost in excess of £125k.

Housebuyers should seek advice before buying jointly with someone who has ever owned a dwelling. If a parent helps out a child by guaranteeing a mortgage and as a result appears on the house deeds as a joint owner, not only will the first time buyers’ exemption be lost, but the purchase will probably incur an extra 3% ‘second home’ SDLT charge on the entire purchase price. A purchase for £300k would incur SDLT of £14k which will be a nasty shock.

23 Nov 17
Stephen Kerrigan & Jane Hivey, Tax Consultants, Cassons