Budget 2017 Run-down

If you missed it, here’s a quick run-down of the Budget and the main changes announced.

The economy (OBR forecast)

Growth: Upgraded forecast to growth from 1.4% to 2% for next year, followed by:

–   1.6% in 2018

–   1.7% in 2019

–   1.9% in 2020

–   2% in 2021

  • Inflation: 2.4% this year, 2.3% next year, 2% in 2019
  • Borrowing: OBR has revised down short-term forecast for public sector net borrowing

–   2016-17: £16.4bn lower than forecast in autumn at £51.7bn

–   Borrowing would fall from 3.8% last year to 2.6% this year –

  • Debt: Overall debt to GDP is 86.6% in 2016-17 before rising to 88.8% in 2017-18 then 88.5% in 2018-19

Business

  • Pledge to make Britain to be the best place to start a business
  • Corporation tax will fall to 19% this year and 17% in 2020 as planned
  • R&D tax credit regime will see a reduction in administrative burdens

–   Introduction of quarterly reporting delayed by one year for small businesses, at a cost of £280m.

Business Rates

  • Cannot be abolished but the revaluation process needs reform – a preferred approach will be set out “in due course” and will consult before next revaluation is due
  • Need to look at rates for digital businesses which don’t use bricks and mortar
  • Additional cap for businesses coming out of small business rate relief – bills won’t increase more than £50 a month and a further cap will continue
  • £1,000 discount on business rate bills for all pubs with ratable value less than £100,000 – covering 90% of all pubs
  • Local authorities to get £300m to deliver discretionary relief for individual hard cases

Tax collection

  • Further plans to stop businesses converting capital losses into trading losses, tackle abuse of foreign pension schemes, introduce UK VAT on roaming telecoms services outside the EU
  • From July, tough new financial penalty for professionals who enable a tax avoidance arrangement that is later defeated by HMRC
  • New measures will raise £820m

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Self-employed and businesses

  • Always encourage entrepreneurs and innovators who are lifeblood of our economy
  • People should have choice in how they work. But choices should not be driven by differences in tax stream
  • Differences in NICs between employment and self-employed were due to differences in entitlements for pensions and parental benefits. Now this cannot be justified.
  • Consultation in the summer over options to address disparities in this area.
  • The lower NI paid by self-employed will cost £5bn to tax system
  • Abolition of Class 2 NICs will remain but the main rate of Class 4 NICS will increase by 1% to 10% in April 2018 – with a further 1% increase in April 2019.
  • Self-employed earning less than £16,250 will still see reduction in total NICs bill
  • Dividend allowance: Reducing tax-free dividend allowance from £5,000 to £2,000 from April 2018

Duties and excise

  • Soft drinks levy is yielding less tax – meaning producers are reformulating sugar out of their drinks
  • £1bn funding for Department for Education from levy for school sports and healthy living programmes
  • VED rates for hauliers and HGV Road User Levy – frozen for another year
  • New minimum excise duty for cigarettes based on a pack price of £7.35 excise
  • No new changes to alcohol and tobacco

Personal tax and savings

  • This year, tax thresholds will rise to £11,500 low rate and £45,000 higher rate

–   Committed to increasing the tax threshold to £12,500, and the higher rate threshold to £50,000 by the end of parliament.

  • The national living wage will rise to £7.50 in April
  • The new NS&I bond will be available from April and pay 2.2% on deposits up to £3,000
  • £4,760 increase in the annual ISA allowance £20,000 comes into effect in April
  • Universal credit taper rate reduced in April from 65% to 63%

Childcare and women:

  • £6bn spending on childcare by end of this parliament
  • Next month – Tax-Free Childcare policy introduced – allowing working families to receive up to £2,000 a year for childcare for children under 12
  • From September, working parents with 3-4 year olds will see doubling of free childcare to 30 hours
  • £20m additional funding for campaign tackling violence against women and girls
  • Tampon tax receipts to fund further £12m for women’s charities
  • £5m to promote ‘returnships’ to the public and private sector, helping people back into employment after a career break
  • £5m for centenary celebrations for 1918 Representation of the People Act – the decisive step in the political emancipation of womenbaby wolverine fuzzy

Tackling productivity

  • £300m to support the brightest research talent, including support for 1,000 PhD students in STEM subjects.
  • £270m to keep UK at forefront of disruptive technologies such as biotech, robotic systems and driverless vehicles
  • £200m for projects to get private sector investment in full-fibre broadband networks
  • £16m for new 5G mobile technology hub

Transport:

  • £90m for the north and £20m for the Midlands from a £220m fund that addresses pinch points in transport network
  • £690m competition for local authorities across England to tackle urban congestion – details to be announced

Devolution

  • 6 new city mayors
  • Further London devolution
  • Midlands Engine Strategy to be published tomorrow
  • Additional £350m for Scotland, £200m for Welsh Government, £120m for incoming NI executive

Education

  • 110 new free schools on top of current commitment of 500 – includes some specialist maths schools
  • Free school transport to be extended to all pupils on free school meals who attend a selective school
  • Extra £260m to improve school buildings
  • Maintenance loans to be made available for part-time undergraduate and doctoral loans in all subjects for the first time
  • Introduction of T Levels: a clearer system of qualifications with clear routes into work and good quality work placements – replacing 13,000 qualifications with 15 clear career focused routes
  • Increase by 50% in the number of hours training for 16-19-year-old technical students including high quality work placements for every student so that they are genuinely work ready
  • Offer maintenance loans for technical students – as university students have
  • DFe will invest up to £40m in pilots for different approaches to lifelong learning
  • £500m additional spending in 16-19 year olds

Health and social care

  • An extra £2bn grant funding for social care over next three years, with £1bn available in 2017-18 – on top of £7bn already committed
  • There will be a green paper on social care.
  • A £100m fund set up to fund triage projects in A&E departments, to relieve pressure on them next winter.
  • New capital programme for NHS sustainability and transformation plans (STPs) to be announced at Autumn Statement. £325m will be available to allow first selected plans to proceed before then.

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