The stamp duty waiver for first-time buyers has dominated headlines on the Autumn Budget. But there were plenty of other announcements that will impact on finances. Here’s what you need to know:
Stamp duty savings
Chancellor Philip Hammond promised to waive the first £300,000 of stamp duty on all homes worth up to £500,000 with immediate effect. He claimed that 95% of all first-time buyers will benefit, with 80% not paying any stamp duty at all.
Under the new system, buyers will pay no stamp duty on a home costing £300,000. On a £500,000 home, the bill will now be £10,000 instead of £15,000.
The cost savings will raise a cheer with those aspiring buyers that are struggling with the challenge of saving a deposit. The Bank of Mum and Dad which is heavily relied upon to boost deposits might also be glad of the news.
Estate agents expect prices to rise as a result of the policy, with prices rising by the stamp duty saved. On the upside, however, some clustering will occur with properties that are marginally above the £500,000 mark falling to below £500,000 to attract first-time buyers.
Only buyers who have never previously owned a home will qualify. For those buying jointly, perhaps with a partner, both need to be first-time buyers to benefit from the waiver. It applies to first-time buyers in England, Northern Ireland and – up until the end of March – in Wales, but not in Scotland.
First-time buyers in Wales should get a move on if they want to avoid stamp duty – from April the Welsh Government has the power to set their own property taxes.
The Chancellor has also tweaked the rules surrounding the 3% stamp duty surcharge to prevent divorcing couples from being hit by these higher rates. The extra stamp duty is charged for those buying holiday homes or investment properties.
Separated couples will be exempt from this surcharge if they keep an interest in the family home, but have moved out and bought their own home.
Tax
The tax-free personal allowance is to rise to £11,850 from £11,500 and the higher rate tax threshold will rise from £45,000 to £46,350 in April 2018.
A basic-rate, 20% taxpayer will save £70 as a result, while a higher-rate payer will save £340 a year.
Retirement planning
The Chancellor resisted the temptation to make major changes to the pension system, keeping the annual allowance at £40,000. The lifetime allowance will increase in line with inflation from £1m to £1,030,000 on April 6 next year – a relief after the constant tinkering with the pension system in previous Budgets.
Investment
Ambitious house-building targets were laid out for building an extra 300,000 homes a year by 2020. Hammond also announced a review into the practice of ‘land banking’ — housebuilders sitting on land where planning permission has been granted, without actually building new homes. Shares in FTSE 100 housebuilding companies fell by around 2% to 3% in the hours following the Autumn Budget speech. Berkeley, Barratt and Persimmon all fell by more than 2%, while Taylor Wimpey fell by 1.5%.
The Budget also saw the Chancellor aim to encourage investment in technology using the tax-efficient Enterprise Investment Scheme. Mr Hammond promised to double the annual £1m allowance for people investing in technology and other ‘knowledge intensive’ sectors companies through the Enterprise Investment Scheme (EIS). The detail is light so far on this, but this announcement could substantially encourage private investment in innovation.
The economy
The growth forecast for 2017 has been downgraded from 2% to 1.5%. GDP downgraded to 1.4%, 1.3% and 1.5% in subsequent years before rising to 1.6% in 2021-22. The downward revisions, driven primarily by the lack of productivity, has taken Britain’s development well below the consensus of economists predictions.
Travel
As well as seeking to help first-time buyers, Hammond threw another bone to so-called millennials and announced the introduction of a new railcard for 26-30-year-olds, giving them a third off train travel.
Short-haul air passenger duty rates and long-haul economy rates are to be frozen and paid for by an increase on premium-class tickets and on private jets.
Savers ignored
There was no mention of savers in the Budget. The Isa allowance will not even rise with inflation in April, with the tax-free limit for 2018/19 remaining frozen at £20,000. However, the limit for Junior Isas will be uprated in line with CPI to £4,260.
With many banks failing to pass on the 0.25% interest rate rise, savers continue to get a raw deal.
