Well, nobody could accuse the Chancellor of setting the world alight. But perhaps we should at least be grateful that most of us haven’t had our fingers burned with this budget, anyway.
The good news for aspirational young house owners – and their parents, who as part of the Bank of Mum and Dad now form part of the ninth biggest mortgage lender in the UK – is that stamp duty on houses costing up to £300,000 is being abolished for first time buyers with immediate effect. And buyers in high cost areas, such as London and Oxford, won’t pay stamp duty on the first £300,000 of a purchase up to half a million pounds. So as of today, future first time buyers could redirect up to £5,000 towards a deposit instead of to the taxman.
And to some extent, we’re all winners. Personal allowances will rise by £350 to £11,850 in April 2018, and the higher rate threshold will go up to £46,350 – an increase of £1,350 per annum. The national living wage will rise by 33p per hour to £7.83 – good news for lower paid workers, though a pressure on employers who may not be able to pass the 4.4 per cent wage increase on to customers – and enabling timely access to Universal Credit makes absolute sense.
Rumours of a dramatic fall in the VAT threshold were rife pre-budget, but for the next two years it will be held at the current £85,000. For small businesses such as domestic builders whose customers have to meet the cost of VAT themselves, rather than reclaiming it, this will be a huge relief, as crossing that threshold tends to make them far less competitive. However, it felt like a holding position – the Chancellor warned of consultation on whether the system can be redesigned, a phrase that usually ends up with no winners apart from the Chancellor.
Business rates are, of course, a bugbear and by switching from using the Retail Price Index (RPI) measurement of inflation to the Consumer Price Index (CPI) by April 2018 – two years earlier than originally planned – he will reduce an unpopular fixed cost to businesses to some extent.
One announcement that is of particular interest is about digital economy royalties that relate to UK sales but paid to low-tax jurisdictions – the so called Google or Amazon tax. It’s more of a statement of intent to make them subject to income tax – this step will only rise around £200m a year – but it signals a new direction in a ramped-up tax avoidance clampdown.
So, what now? It was a bit of a something and nothing budget, perhaps driven more by politics than economics. Well, if you’re a smoker, there’s never been a better time to kick the habit, as you’ll see a 28 pence rise on your pack of 20s, though you can comfort yourself with a glass of wine – duty on most alcohol won’t rise.
And if the budget and the weather are both too dreary for words, consider booking a short holiday – but don’t splash out too much. Short-haul air passenger duty rates are being frozen – as are long-haul rates for economy passengers. It might be a comfort to know that the people ahead of you who turn left in the plane have stumped up the difference instead.