The Chancellor Philip Hammond has announced in his Budget an extra £2bn for under-pressure social care services in England. On the economy, he said growth was expected to be higher – and borrowing lower – than forecast in November. He also promised to help firms hit by business rate rises – but increased NI bills for many self-employed people.
Please find a summary of the key announcements below.
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
• 2.0% 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 rateable 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
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 women
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.
