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Budget 2017: 15 key takeaways

We highlight 15 key measures announced in the Budget by chancellor Philip Hammond.

The Budget included some expected and one not so expected measures this time around. 

Chancellor Philip Hammond pulled a stamp duty rabbit out of the hat, triggering a crescendo of noisy approval from his Tory peers. 

However, his statement to the House of Commons got off to a somewhat more sombre start as economic growth forecasts were cut. 

The chancellor revealed that the Office of Budget Responsibility slashed its UK growth expectations over the five year term of its forecast horizon, with its 2018 estimate dropping from 1.6% to 1.4%, matching consensus expectation.

In addition, OBR revised down the total the UK would borrow this year, from the £52 billion it predicted in March, to £49.9 billion.

We highlight the key features in the Budget... 

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The Budget included some expected and one not so expected measures this time around. 

Chancellor Philip Hammond pulled a stamp duty rabbit out of the hat, triggering a crescendo of noisy approval from his Tory peers. 

However, his statement to the House of Commons got off to a somewhat more sombre start as economic growth forecasts were cut. 

The chancellor revealed that the Office of Budget Responsibility slashed its UK growth expectations over the five year term of its forecast horizon, with its 2018 estimate dropping from 1.6% to 1.4%, matching consensus expectation.

In addition, OBR revised down the total the UK would borrow this year, from the £52 billion it predicted in March, to £49.9 billion.

We highlight the key features in the Budget... 

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Stamp duty changes

The big one! Hammond announced that he will be abolishing stamp duty for all first time buyers making home purchases worth up to £300,000.

He added that the duty will be scrapped on the first £300,000 for those buying properties up to £500,000, saving buyers £5,000.

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EIS/VCT crackdown

The chancellor doubled the Enterprise Investment Schemes (EIS) investment limit for knowledge investment firms. 

This means the maximum annual tax exemption on EIS investment would rise from £1 million to £2 million.  

The government said it expected the change to add £7 billion to the total committed to early-stage enterprises.

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Brexit budget

While pointing out that 'no one should doubt our resolve', Hammond also announced that he has set aside a further £3 billion for Brexit contingencies, in addtion to the £700 million already spent. 

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Tax evasion clampdown

To help fund the previous two measures, the government will be introducing a whopping 18 new measures against tax avoidance and evasion. 

The plan includes introducing a requirement to notify HMRC of the creation of certain offshore structures, which can be used to evade tax.

It is expected to raise an additional £4.8 billion by 2022/23. 

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Increased infrastructure investment

Meanwhile Hammond reaffirmed the government’s commitment to innovation and improving efficiency with a raft of new measures.

The £23 billion infrastructure investment fund announced last autumn will be extended for another year and raised to £31 billion.

On top of this, a further £2.3 billion is to be invested in research & development (R&D) and the R&D tax credit for companies will be raised by 12%.

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Personal allowance rise

As part of the Budget, the chancellor announced that the personal allowance will rise to £11,850 from April, from the current £11,500. 

Meanwhile, the higher rate threshold will rise to £46,350 starting from April next year.

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Cheers for beers

Some good news for drinkers too as the chancellor announced he would freeze duties on spirits wine and beer, receiving cheers from the backbenches. 

However, not so good for smokers though as the tobacco tax will continue to rise at inflation plus 2%, while a 1% additional duty on hand rolling tobacco will also be introduced. 

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Increased Jisa limits

Elsewhere the chancellor put a smile on the face of children by revealing the limits on Junior ISAs and Child Trust Funds will rise in line with consumer price inflation.    

The limis on Individual Savings Accounts (ISA) limits will remain unchanged at £20,000,

 

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Challenges of the digital economy

The chancellor highlighted the tax challenge posed by the evolving digital economy announcing measures to address some of these. 

Expected to raise £200 million a year, the government will now apply income tax to royalties relating to UK sales at low tax jurisdictions. 

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Staircase tax

The chancellor announced announced that the switch over of business rates from retail price index (RPI) to the consumer price index (CPI) will take place two years earlier than planned.

The switch to CPI as a measure of inflation in April 2018, the chancellor claims will save businesses £2.3 billion over the next five years.

In addition he said the government will legislate to address the 'staircase tax' with businesses that are hit to have orignal bills reinstated. 

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NHS investment

The chancellor will be giving an extra £2.8 billion to the NHS, which is short of the £4 billion asked for by the chief executive of the service Simon Stevens. 

 

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Freeze of VAT threshold

Hammond has ruled out any reduction in the turnover threshold for small businesses to register for VAT purposes.

He said that the current £85,000 lower bound was well balanced to keep smaller enterprises outside the VAT tax system, and would be frozen for at least two years.

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Lifetime allowance

In documents released alongside the Budget, the Treasury said lifetime allowance will rise from £1 million to £1.03 million for the 2018/19 year in line with the consumer price index (CPI).

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Long term strategy for fintech

The government has pledged to produce a long‑term strategy to help the UK asset management industry thrive in the digital world.

The strategy is a continuation of the UK investment management strategy launched alongside 2013’s Budget.

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