There were not many measures in Wednesday’s budget that affects individuals.
There were the usual announcements of the Personal Allowance, NIC limits and tax rate bands for the tax year starting April 2018. The tax free personal allowance will increase to £11,850 (increase of £350) and the higher rate threshold increases to £46,350 (increase of £1,350). Not significant changes, and only in line with CPI, but welcome nonetheless. Just a shame the personal allowance was not £12,000, which would be a memorable £1,000 a month tax free.
The Class 1 NIC bands were amended for employed earners; the band at which 12% NIC is paid was also extended to £46,350 (to match the increase in the basic rate band for tax), so a 20% tax saving but a 10% NIC increase for those earning at that level of pay.
With the younger generation and housing on the agenda the headline change in the budget was the Stamp Duty Land Tax (SDLT) abolition on property purchases worth up to £300,000 for first time buyers. For properties worth up to £500,000 SDLT is due at 5% on the excess over £300,00, purchase in excess of £500,000 will pay SDLT as normal. The maximum saving here for first time buyers is £5,000. Another welcome change, although there are fears this may push up house prices in these bands.
For parents who wish to assist their children with a property purchase make sure that you are not named as a buyer as if you are, and have held a property previously, the exemption will be lost. There are other conditions to be met to secure the relief so do check these. The relief applies to transactions with an effective date (usually completion date) on or after 22 November 2017.
There were also some tweaks to the SDLT and 3% higher rate, largely for those who are purchasing additional properties and divorcing. This will effectively grant relief from the additional 3% rate if a court order prevents someone disposing of their interest in a main residence but who wish to purchase a new residence. Do take advice on this change if you think you may be affected.
There were no announcements of changes in Inheritance Tax and no major changes for individuals for Capital Gains Tax. ISA limits from April 2018 were frozen at the current level, so we still have a £20,000 investment level.
For those employees with a company car that is a diesel, it was announced that the 3% supplement on diesels will be increased to 4% unless the car meets the RDE2 emissions test (in which case the supplement will not apply at all). The issue here is that RDE2 tests are not mandatory until 2020 so car manufacturers may not be able to advise if a car meets the test. The chancellor has announced what appears to be an impossible task to avoid the tax increase; this new rise is very likely to apply to every single diesel car in the short term.
Overall for individuals a quiet budget, which I was glad of. Recently we have had much tinkering with tax relief’s, different tax rates for different types of income and most of these have benefited very few people or been poorly thought out. We can now plan for the rest of this tax year and next without trying to get to grips with new rules and relief’s.