The Chancellor, Philip Hammond, delivered his first Budget speech against a backdrop of Brexit uncertainty.
As part of a fiscally-tight Budget, the Chancellor decided to target company owners and investors in a bid to raise billions of pounds and provide a “strong and stable platform” for the UK Government’s negotiations as it navigates a path away from the EU.
He also proposed to enhance the fairness in the UK’s tax system with a view to transforming the economy into one that works for everyone.
The key points from his speech are summarised below:
- The economy grew 1.8% in real terms in 2016, second only to Germany among major advanced economies
- The current account deficit remains large by international and historical standards, widening to 4.9% of GDP in the first three quarters of 2016
- The forecast for GDP growth in 2017 has increased by 0.6% to 2.0%
- As previously announced, the tax-free personal allowance will increase to £11,500 on 6 April 2017 with the higher rate threshold increasing to £45,000 at the same time. (In Scotland, it is £43,000 for earned income.)
- The tax-free Dividend Allowance will reduce from £5,000 to £2,000 in April 2018
- Following consultation, the government has confirmed that it will reduce the money purchase annual allowance to £4,000 from April 2017
- The government is carrying out the first statutory review of the?State Pension age before publishing its review by 7 May 2017
- Qualifying recognised overseas pension schemes (QROPS): The government will introduce a 25% charge on transfers to QROPS. Exceptions will apply to this charge (allowing transfers to be made tax-free) where people have a genuine need to transfer their pension, including when the individual and the pension are both located within the European Economic Area
- It is confirmed that a NS&I bond paying interest of 2.2% over three years will be available from April 2017, on savings from £100 up to £3,000
Vehicle Excise Duty
- From 1 April 2017, rates for cars, vans and motorcycles registered before April 2017 will increase by Retail Prices Index (RPI).
- From 13 March 2017, the duty rates on beer, cider, wine and spirits will increase by RPI inflation
- Duty rates on all tobacco products increased by 2% above RPI inflation from 6pm on 8 March 2017. In addition, the government will introduce a Minimum Excise Tax for cigarettes from 20 May 2017. The rate will be set at £268.63 per 1,000 cigarettes