What the upcoming Autumn Budget could mean for you
Chancellor of the Exchequer, Philip Hammond, will announce the 2017 Autumn Budget this Wednesday, the 22nd of November. Although we can’t know exactly what will be on Hammond’s agenda, a few budget policies are particularly likely. Below we outline some of the key policies you can expect to come into effect, and what they could mean for your financial life.
As swathes of us are aware, a chronic lack of affordable housing has put the prospect of getting on the property ladder beyond the reach of swathes of the population – especially young people. Huge rent payments make saving for a deposit impossible for many, not to mention the various other costs associated with purchasing a property. The autumn budget is expected to address this issue by changing the way that stamp duty is paid. The responsibility of paying this tax currently falls with the buyer, and can be a significant sum. One solution under consideration is to make the seller, rather than the buyer, liable for stamp duty. This would be a fairly simple way to make getting onto the property ladder, as well as moving up it, easier.
Hammond is also planning measures to ensure that 300,000 new homes are constructed per year – a 50% increase on current figures. Additionally, £10 million is expected to be invested in the current ‘Help to Buy’ scheme.
NHS and Public Sector
The chief of the NHS, Simon Stevens, approached Hammond to propose a £4 billion ‘cash injection’ into the service. Although this was rejected, it has been hinted that we could finally see an end to the pay-cap placed on the wages of public sector workers – including those employed by the NHS. This may prove vital, as public sector professions such as teaching and nursing continue to face a recruitment crisis.
In recent elections, an increased number of young people have been flocking to the polling stations, but generally voting Labour. For this reason, Hammond and the Conservative government are under pressure to appeal to younger voters. Theresa May has announced that, following the autumn budget, graduates will only begin to repay their student loans when their annual salary exceeds £25,000, rather than the current threshold of £21,000. Student Finance in general is also likely to be reviewed, and tuition fees capped at £9,250 until 2019.
The government aims to reduce its borrowing to below 2% of GDP, and eliminate the deficit (the gap between state income and expenditure) by 2025.
There do not appear to be any significant announcements about tackling personal debt in general, but it seems that some small steps will be taken to alleviate the strain which large sums of student debt have caused young people in recent years. The removal of pay-caps from public sector workers could also act to reduce levels of personal debt, as the better wages lift some of the financial pressure from workers in this sector.
The impact which the introduction of Universal Credit had on personal debt levels will hopefully also be mitigated following Wednesday’s announcements. The six week wait which applicants currently face before receiving their first payment will be reduced to 31 days, which is likely to reduce dependence on credit as applicants await their payment coming in.
There is some speculation that older workers, over the age of 45, could have find tax relief suspended, in order to fund a reduction in National Insurance payments for younger workers in their 20s and 30s. However, this is less likely to transpire than other predictions.
The new budget is likely to increase investment in driverless cars, which could be on UK roads as soon as 2021. Regulation changes, expected to be introduced in Wednesday’s budget, will allow developers to apply to test driverless vehicles on UK roads.
It is also expected that more road-widening schemes will be announced, and some hope that the latest budget will allow for the development of faster rail links between cities in the North of England.
As well as possibly lifting pay-caps currently imposed on public sector educators, capital is expected to be set aside for investing in new free schools. More than half a billion pounds has been dedicated to refurbishing current schools, and building new ones – including the controversial reintroduction of Grammar Schools, which have been the brain child of Theresa May for some time. Another £500 million is also likely to be invested in vocational education for students over the age of 16.
The Enterprise Investment Scheme (EIS) is to be put under review. The scheme currently offers tax reductions to investors funding enterprises categorised as ‘high-risk’. The scheme only benefits wealthy investors, who can save up to £300,000 in tax every year.
Following the scandal caused by revelation of the Paradise Papers, tackling tax avoidance is expected to be given high precedence for this budget. An estimated £6.5 billion could be raised by cracking down on tax havens.
The threshold for paying the 40% rate of income tax looks set to be raised from £45,000 to £50,000 per annum. This tax cut will benefit the wealthiest 13% of the UK population.
Hammond plans to set aside £60 billion to deal with the financial turbulence which Brexit is likely to cause. This fund has been referred to by Hammond as a “Brexit Warchest”. The fund is likely to be garnered by raising National Insurance rates for the self-employed, and imposing a higher tax on cigarettes, among other changes.
If you need more information about the options available to you in dealing with your debt, you can always speak confidentially with one of our friendly advisors on 0808 2085 198.