On 22nd November 2017, the Chancellor Philip Hammond delivered the Autumn Budget 2017. Mr. Hammond tried to send a positive message during his Budget speech, but his announcements particularly did not convince ordinary people who have been affected by Brexit long period of uncertainty. Any product or service being sold in UK is becoming more expensive and people are felling in their wallet.
In the last decade, I have read and studied many UK Budgets and this one is the worst budget ever. Mr. Philip Hammond forgot about the pensioners, the students and the hard workers. He also forgot about the business people. Business people who are the individuals responsible to create employment and innovation to this country. They are the risk takers.
Mr. Philip Hammond tried to hide UK terrible Economy indicators and has not spoken enough about what the Government will practically do to improve its Economic situation. For the first time in my life, I can say that they were only losers in this Budget.
Follow below the main UK budget announcements:
Brexit and Economy
- UK Economy will grow by just 1.5 % this year and 1.4 % next year
- £ 3 billions set aside over two years to help prepare for a possible NO DEAL Brexit
- Productivity growth, pay growth and business investment also revised down
- Inflation forecast to fall from 3 % peak towards 2 % target
My comments: It is not good news. It was predicted that GDP growth would slow this year: the fall in the pound followed the EU referendum has pushed up CPI (consumer price inflation) and squeezed household’s real income and spending.
- £ 44 bn to fund 300,000 new homes a year by mid 2020s
- Council can charge 100 % council tax premium for empty properties
- Planning review to tackle LAND BANKING by developers
- Stamp Duty is scrapped for first time buyers on homes worth up to £ 300,000 and in London on the first £ 300,000 on homes costing up to £ 500,000
My comments: This could represent a saving of up to £ 5,000 for first time buyers. However, any property valued higher than £ 500,000 will not qualify at all. Joint buyers will also have to be careful as both need to be first time buyers to qualify. The relief will also be denied if the applicant already owned property abroad previously. The unaffordability of homes is, in many parts of the UK a major problem. Average house prices are between 8 and 12 times the average wage- a historically very high multiple and sometimes impossible for most to finance with a regular mortgage. Millions of people cannot afford to buy a home.
The income tax free personal allowance will rise to £ 11,850 and the higher rate threshold to £ 46,350 next year.
National living wage will rise by 4.4 % to £ 7.83 an hour from April 2018.
The VAT registration threshold will be kept at £ 85,000 and froze for the next 2 years
A change to the way business rates are calculated will be brought forward
£ 2,3 bn to boost research and development and £ 500 million for new technologies, including
5G mobile networks.
£ 40 million will be available to train computer and Math teachers
A “world first “national advisory body to carry out research into AI (Artificial Intelligence)
£ 7.5 bn rise in National Health Service day to day and capital spending across the UK, allocated £ 2,3 bn for research and development
A pay rise for over worked nurses was pledged but only if an independent body recommends it
Taxes could be levied on single use plastics to help the UK lead the way on tackling the sourge of plastic littering the oceans
Alcohol, tobacco and fuel
Duty will be frozen on wine, spirits, beer and cider other than high strengthen, low quality alcohol.
Online marketplace will be jointly liable with sellers for VAT to address online VAT fraud, which costs the taxpayer £ 1,2 bn a year.
My comments: These changes target sellers including eBay and Amazon which will be required to pay 20 per cent VAT on behalf of their overseas sellers.
Digital giants such as Google and Apple will have to pay income tax on royalties relating to UK sales even when they are paid to a low tax jurisdiction.
Reforms to universal credit will remove the seven-day waiting period
Higher road tax for new diesel cards which do not meet green standards
Air passenger duty increased on premium-class tickers and private jets
Tax free charging at work for electric cars
Fuel duty rise for petrol and diesel cars scrapped
Young person rail card scheme extended to those age 26 to 30
Other important announcements:
Offshore trusts: anti-avoidance rules
Introduce new anti-avoidance rules that relate to the taxation of income and gains accruing to offshore trusts. This measure ensures that payments from an offshore trust intended for a UK resident individual do not escape tax when they are made via an overseas beneficiary or a remittance basis user.
Double the limit on the amount an individual may invest under the EIS in a tax year to £2 million from the current limit of £1 million, provided any amount over £1 million is invested in one or more knowledge-intensive companies.
Tackling disguised remuneration
As announced at Budget 2016 and confirmed at Autumn Budget 2017, the government will legislate in ‘Finance Bill 2017-18’ to tackle existing, and prevent future use of, disguised remuneration tax avoidance schemes. The majority of the changes announced at Budget 2016 have been enacted, including a new charge on loans made after 5 April 1999 through disguised remuneration schemes that remain outstanding on 5 April 2019.
Off-payroll working reform: extension to the private sector
As announced at Autumn Budget 2017, the government will consult on how to tackle non-compliance with the intermediaries legislation (commonly known as IR35) in the private sector. The legislation ensures individuals who effectively work as employees are taxed as employees, even if they choose to structure their work through a company.
Corporate interest restriction
The government will legislate in both ‘Finance Bill 2017-18’ and ‘Finance Bill 2018-19’ to make technical amendments to the corporate interest restriction rules. This will ensure the regime works as intended. Certain of these amendments are treated as having effect on and after 1 April 2017, when the corporate interest restriction rules commenced. The remainder of the amendments have effect on and after 1 January 2018.
Corporation Tax: Double Taxation Relief (DTR) and permanent establishment (PE) losses
As announced at Autumn Budget 2017, the government will legislate in ‘Finance Bill 2017-18’ to restrict the amount of credit allowed, or deduction given, for foreign tax suffered by an overseas PE of a company, where the company has received relief in the foreign jurisdiction for the losses of the PE against profits other than those of the PE.
Intangible Fixed Assets: related party step-up schemes
As announced at Autumn Budget 2017, the government will legislate in ‘Finance Bill 2017-18’ to ensure license arrangements between a company and a related party in respect of Intangible Fixed Assets are subject to the market value rule. The government will also legislate to ensure that realisations of a company’s intangible fixed asset, where consideration is wholly or partly something other than cash, will recognise the market value of that consideration.
Bank Levy re-scope
As announced at Summer Budget 2015 and confirmed at Autumn Statement 2016, the government will change the Bank Levy’s scope so that UK headquartered banks are levied only on their UK balance sheet liabilities. Minor changes will also be made to the administration of the Bank Levy.
The government has announced that it will introduce the NICs Bill in 2018. The measures it will implement will now take effect one year later, from April 2019. This includes the abolition of Class 2 NICs, reforms to the NICs treatment of termination payments, and changes to the NICs treatment of sporting testimonials.
Employer-provided electricity for an electric car
As announced at Autumn Budget 2017, the government will legislate in Finance Bill 2018-19 to exempt employer-provided electricity from being taxed as a benefit in kind from April 2018. This will apply to electricity provided in workplace charging points for electric or hybrid cars owned by employees
Capital gains tax: annual exempt amount
The government will uprate the Capital Gains Tax annual exempt amount line with the Consumer Prices Index from £11,300 for individuals and personal representatives and £5,650 for most trustees of a settlement, to £11,700 and £5,850 respectively.
Taxing non-residents’ gains on immovable property
As announced at Autumn Budget 2017, the government has published a consultation on taxing non-residents’ gains on immovable property. This measure will broaden the UK’s tax base to include disposals of UK commercial property by non-residents, both directly and indirectly, and will bring all companies into charge on disposals of residential property, and all persons into charge on indirect disposals of residential property.
VAT: split payment for online payments
As announced at Autumn Budget 2017, the government will publish on 1 December 2017 a response document to the call for evidence to develop a split payment model that was launched after Spring Budget 2017.
A split payment model would allow VAT to be extracted from online payments in real time. The responses to the call for evidence were broadly positive about the concept but highlighted the complexities of implementation. The response document will set out plans for further engagement with external stakeholders, in preparation for a full consultation in 2018.