Tomorrow, Philip Hammond will deliver his first ever Spring Budget. It will also be the last of its kind, as the Chancellor has previously decreed that country’s primary fiscal statement will now take place in the Autumn. Whilst many believe that tomorrow’s budget may make for a non-event, others are poised for the update given the Prime Minister’s intent to trigger Article 50 within the month.
Many are predicting that statistics will show a steadier than expected rate of growth considering the impending Brexit. This, coupled with a lower rate of borrowing is likely to produce extra funds of around £45 billion. However, it is unlikely that should this occur, that we will see any extra public spending occurring as a result. Instead, it is expected that the Chancellor will instead earmark these funds to mitigate coming economic uncertainty.
Back in November, the Office for Budget Responsibility set the 2017 growth forecast at just 1.4%. However, experts now believe that tomorrow this figure will be revised, with JP Morgan estimating a forecast of around 1.9%.
Pensions and Income Tax
In Scotland and England, the tax-free allowance will rise to £11,500 for the year 2017/2018. In England, the higher tax threshold will be £45,000. In Scotland, the threshold has been dropped to £43,000 after a recent vote by Scottish Parliament.
There will be some changes to pensions, rising by 2.5%. Those on the new flat rate will see their weekly sum rise to £159.55. If you are on the old state pension, your new weekly allowance will rise to £122.30.
Homes and Property
Stamp duty is again a topic of conversation, with many arguing that the current rate is impeding the sales of homes in excess of £925,001. The hike in stamp duty is thought to be behind the halving of the sale of properties in the £5-10 million price bracket. It is thought that by reducing the stamp duty, wider economic growth could be enjoyed, resulting in a lower cost to the Treasury.
Move to Digital is due to take place from April next year, with HMRC looking to digitise record keeping and tax reporting. The first groups to be affected will be landlords and those who are self-employed. However, there will be faction asking the Chancellor to delay the implementation of the digitised systems, claiming that the taxation sector has already undergone significant changes of late.
One topic which many people will be happy to hear discussed is the levying of subscription charges. It has been suggested that the Chancellor will implement new legislation regarding subscription charges for services. At present, many consumers have been trapped by subscription charges after failing to realise that they had been signed up. Many only realised that they had fallen into a subscription trap after money had been taken from their bank account. According to Citizen’s Advice, around 2,000,000 consumers are affected each year.
It is expected that firms will be forced to make T’s and C’s clearer and shorter. Firms who breaks these rules could find themselves on the wrong end of a fine.
Many firms are calling on the Chancellor to offer some relief from heavy-handed business rates. Whilst London is vastly becoming a hub for digital innovation, with many promising start-ups emerging, the majority of such firms are feeling strangled by rates. Small businesses argue that they collectively provide many jobs and support the economy and that in turn, the Government should support their quest to innovate. Easing the rates releases the burden on smaller firms and could reduce the lure of moving their firms elsewhere, thus keeping their revenue in the UK.
Although it is impossible to know the exact content of the Chancellor’s budget, we believe the above to be a wise estimate of the issues that may be included. On Friday, we will be publishing a new version of our AGL magazine, containing our roundup on the issues that emerge from the Spring Budget. Be sure to check back on Friday to hear our thoughts!