Here’s a brief roundup of the key headlines from the chancellor’s first Budget:
The state of the economy
- UK second-fastest growing economy in the G7 in 2016.
- Growth forecast for 2017 upgraded from 1.4% to 2%.
- But GDP downgraded to 1.6%, 1.7%, 1.9% in subsequent years, then 2% in 2021-22.
- Inflation forecast to rise to 2.4% in 2017-18 before falling to 2.3% and 2.0% in subsequent years.
- A further 650,000 people expected to be in employment by 2021.
- Annual borrowing £51.7bn in 2016-17, £16.4bn lower than forecast. Borrowing forecast to total £58.3bn in 2017-18, £40.6bn in 2018-19, £21.4bn in 2019-20 and £20.6bn in 2020-21.
- Public sector net borrowing forecast to fall from 3.8% of GDP last year to 2.6% this year, then 2.9%, 1.9%, 1% and 0.9% in subsequent years, reaching 0.7% in 2021-22.
- Debt rose to 86.6% this year, but will fall to 79.8% in 2021-22.
Personal taxation – self employed
- The main rate of Class 4 National Insurance contributions to increase from current rate of 9% to 10% in April 2018 and 11% in April 2019, raising £145m a year by 2021-22 at an average cost of 60p a week to those affected.
Pensions and savings
- Reduction in tax-free dividend allowance for shareholders from £5,000 to £2,000 from April 2018.
- £435m for firms affected by increases in business rates.
- £300m hardship fund for local councils to support small businesses worst affected.
- Pubs with rateable value of less than £100,000 to get a £1,000 discount on rates they pay.
- Any business losing existing relief will not pay more than £50 a month.
- A tax avoidance clampdown totalling £820m to include action to stop businesses converting capital losses into trading losses, tackle abuse of foreign pension schemes and introduce UK VAT on roaming telecoms services outside the EU.
Alcohol, tobacco, gambling and fuel
- A new minimum excise duty on cigarettes based on a packet price of £7.35.
- No increases in alcohol or tobacco duties on top of those previously announced.
- Vehicle excise duty rates for hauliers and the HGV Road User Levy frozen for another year.
- £300m to support 1,000 new PhD places and fellowships in STEM (science, technology, engineering and maths) subjects.
- Free school transport extended to all children on free school meals who attend a selective school.
- Increased investment in schools of £216m.
- New T-Levels to be introduced to give parity of esteem for technical education.
- Number of hours of training for technical students aged 16 to 19 to be increased by more than 50%, including a high-quality, three-month work placement.
- £100m to place more GPs in accident and emergency departments for next winter.
- Additional £325m to allow the first NHS Sustainability and Transformation Plans to proceed.
- An extra £2bn for social care over next three years, with £1bn available in the next year.
- Long-term funding options to be considered but so-called “death tax” on estates ruled out.
- Transport spending of £90m for the north of England and £23m for the Midlands to address pinch points on roads.
- £270m for new technologies such as robots and driverless vehicles, £16m for 5G mobile technology and £200m for local broadband networks.
- New funding totalling £20m to support the campaign against violence against women and girls.
- A further £5m committed to project to celebrate the centenary of women first getting the vote, and to educate young people about its significance.
- Funding of £5m to support people returning to work after a career break.
In addition to these points, it was announced that the implementation of making tax digital (MTD) for businesses under the VAT threshold (£83k) will be delayed for one year. Want to find out more about MTD and what it means for you and your business? Read our blog here
Thanks for reading.