In the year of the double budget we expected big announcements from the Chancellor’s speech on Wednesday.
After the recent predictions it’s fair to say that this first Autumn Budget was fairly uneventful.
For weeks we have been speculating about pension announcements, Brexit implications and stamp duty changes. But the ‘make or break’ budget didn’t give us many surprises.
After suggestions that there may be a ‘stamp duty holiday’ for first time buyers, Philip Hammond announced that stamp duty will in fact be scrapped for first time buyers on all homes up to £300,000. This means (due to average house prices in London) that 80% will not having to pay.
This applies immediately in England, Wales and Northern Island and the Scottish Government will decide whether to do the same in Scotland.
With the average deposit in the UK standing at £32,889 we will have to wait and see how much of a difference this stamp duty relief will make overall. Although this could change buyers’ affordability calculation, so get in touch if you would like to discuss your options.
National Living Wage
The National Living Wage will increase from £7.50/hour to £7.83/hour from April 2018. This will be the minimum wage for over 25s.
This rise of 4.4% will leave full time workers as much as £600 better off a year.
The personal tax allowance (before tax is paid) rises from £11,500 to £11,850 in April.
This is for basic rate tax payers and coincides with the Conservative goal of increasing the allowance to £12,500 by 2020-21.
The higher rate tax payers will see the threshold rise from £45,000 to £46,350.
What’s already happening
Buy to let landlords
From April 2017 landlords saw a reduction on the amount of tax relief they can claim on mortgage interest payments.
People will be able to pass on their property to their descendants to the value of £100,000. This is now in its second year.
The Transferable Main Residence Allowance (TMRA) will be added to the Inheritance Tax threshold of £325,000, so in total it will allow each individual to pass on £425,000 with no tax payable – this equates to £850,000 per couple.
In 2016 the tax-free dividend allowance was announced as £5000. The Spring Budget delivered the news that this amount will be reduced to £2000 from April 2018
Those of you who are self-employed will see a big difference in your tax bill if you pay yourself in dividends alongside a wage. Equally if you have a large number of shares you will see a change.
As always contact your adviser on 01752 837950 if there is anything you are concerned about or would like further advice on.