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30th November 2017
Autumn Budget 2017

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Philip Hammond delivered his second Budget as Chancellor on 22 November 2017 with only one or two small surprises.  

We look at the main announcements and what they could mean for you.

Tax allowances
The tax-free personal allowance will rise with inflation to £11,850 from April 2018. The result is that you’ll pay less tax on your earnings. The higher rate threshold will rise to £46,350. The government say that in 2018/19, a typical taxpayer will pay £1,075 less income tax than in 2010/11.

Changes to the tax-free dividend allowance and ISAs
The dividend allowance will be £2,000 from April 2018,, down from £5,000 this tax year.

The allowance means that you will not pay tax on the first £2,000 of any dividend income, even if you have other income.

It’s a useful allowance, particularly if you’re a smaller investor looking to get income from shares which aren’t invested in an ISA. Any income you get from an ISA is tax-free whatever rate of tax you pay; and the annual ISA subscription limit for 2018/19 will remain unchanged at £20,000.

Annual capital gains tax allowance
This is going up from April 2018 by £400 to £11,700 for individuals and by £200 to £5,850 for trusts.

Lifetime allowance (LTA) for pensions
The Budget papers confirmed that the lifetime allowance for pension savings will increase in line with the Consumer Price Index (CPI), rising to £1,030,000 for 2018/19. The LTA currently stands at £1m.

While pension savings over this amount will attract an extra tax charge, pensions remain a very tax-efficient way to save. If you’ve built up considerable pension savings, the increase in the pension lifetime allowance is likely to be very welcome and potentially saves you or your family £16,500.

State pension
The state pension triple lock will increase by 3% from April, amounting to £3.65 extra a week for those entitled to the flat rate pension.

The 3% rise means that the full basic state pension will go up from £159.55 to at least £164.37, giving pensioners an annual rise of £250.

However, those who reached state pension age before 6 April 2015 and are on the old basic state pension will only see their entitlement increase from £122.30 to £125.97 a week, giving an annual increase of only £191.

Inheritance tax allowance (IHT)
If you pass on your home to a close family member when you die, there’s an extra IHT allowance on top of the standard £325,000 nil rate band for each person. This is going up to £125,000 from £100,000 next April.

What this means is that more of your estate can sit outside of inheritance tax. Qualifying couples can pass on assets of up to £900,000 free of IHT to their loved ones.

EIS and VCTs
The Chancellor announced plans to double EIS investment limits for knowledge-intensive companies, while ensuring that EIS vehicles are "not used as a shelter for low-risk capital preservation schemes". This increase will now allow an investment of £2 million per annum into these arrangements.

The Chancellor also said that the government is publishing an action plan to unlock over £20bn of new investment in UK knowledge-intensive, scale-up businesses.

Stamp duty land tax
Good news and a welcome boost for many people trying to get on the property ladder as stamp duty is to be abolished immediately for first-time buyers purchasing properties worth up to £300,000.

To help those in London, the first £300,000 of the cost of a £500,000 purchase by all first-time buyers will be exempt from stamp duty, with the remaining £200,000 incurring duty at 5%.

Some 95% of all first-time buyers will benefit, with 80% paying no stamp duty.   The Office for Budget Responsibility has said that the stamp duty cut will push house prices up. It says it expects this policy to increase prices by 0.3%, with most of this effect occurring in 2018.

Corporate tax on property
The corporate indexation allowance will be frozen from 1 January 2018. Accordingly, no relief will be available for inflation accruing after this date in calculating chargeable gains made by companies.

Brexit
An extra £3bn will be allocated to prepare for Brexit over the next two years. The money will make sure the government is ready on "day one of exit".

It will include funding to prepare the border, the future immigration system and new trade relationships.