From an increase in the amount of vehicle excise duty payable on diesel cars to a stamp-duty break for first-time buyers, find out what the autumn Budget means for you.
A gloomy outlook for the public finances meant that Chancellor Philip Hammond had little extra money to play with in this week’s Budget – and giveaways were thin on the ground.
Hammond did however manage to extend the fuel-duty freeze for at least another 12 months, and also announced a significant cut in stamp duty for first-time buyers.
The Office for Budget Responsibility – the independent body which is now charged with providing economic forecasts to the Treasury – now says that UK GDP growth is going to be well below previous expectations for the rest of the decade.
Rather than the 2% growth predicted back in March, the economy is now set to expand by just 1.5% this year, and then by 1.4% in 2018 and 1.3% in both 2019 and 2020.
The main reasons for these downgrades are a lack of productivity growth and a slowdown in business investments caused in part by rising prices and concerns over the shape of the eventual Brexit settlement.
On that topic, Hammond also said he was putting aside an extra £3bn over the next two years to cover any costs that arise from our departure from the European Union.
The decision to freeze both petrol and diesel duty means that the typical car driver will have benefited to the tune of £850 since the policy was introduced by the coalition government in 2010.
Over the same period, the average van driver will be £2,100 better off – and overall, the policy has cost the government £46bn, Hammond said.
There had been speculation before the Budget that the Chancellor might decide to raise duty on diesel vehicles as part of a policy to reduce air pollution.
But instead, the government has decided to increase the amount of first-year vehicle excise duty payable on diesel cars which do not meet the latest emissions standards. Vans, however, will not be affected.
The money raised by this tax increase will be used in a new clean-air fund.
The government is also devoting £400m to improving the UK’s electric-vehicle charging infrastructure.
And there are also changes planned for drivers who use their employers’ charging points while at work: from next year, this practice will no longer attract a benefit-in-kind tax charge.
As part of his attempts to appeal to millennials, Hammond also said that a new railcard – offering discounts of one third off ticket prices – would be made available to travellers aged between 26 and 30.
He also confirmed the government’s plans to abolish tolls on the Severn Bridge from the end of 2018.
One of the most eye-catching measures in the Budget was the decision to abolish stamp-duty on purchases of homes worth up to £300,000 for first-time buyers in England, Wales and Northern Ireland.
The cut, which comes into effect this week, is also available on the first £300,000 of first-time purchases worth up to £500,000 – this is to help buyers in areas where house prices are particularly high, such as London and the South-east of England. The tax cut is worth up to £5,000 per transaction.
Hammond also unveiled new funding and loan guarantees for property developers with the aim of increasing the number of new houses built in the UK to 300,000 a year within the next decade.
Meanwhile, local authorities are to be given powers to double council tax bills on empty homes in order to encourage better use to be made of the UK’s housing stock.
The tax system
Everyone’s tax-free personal allowance will rise from the £11,500 to £11,850 from next April, while the higher-rate (40%) tax band will start at £46,300 rather than £45,000 as at present.
At the same time, the National Living Wage is to be increased ahead of inflation by 4.4% to £7.83 an hour.
The Chancellor said he had decided against changing the rules on VAT registration for small firms, following speculation that he might reduce the current minimum turnover threshold of £85,000 to bring it in line with countries such as Germany.
Meanwhile, from next April, future increases in business rates will be linked to CPI (Consumer Prices Index) inflation rather than RPI (Retail Prices Index), which tends to be higher.
Tax on alcoholic beverages will not be increased, with the exception of rates on white cider.
Hammond said that this drink was often consumed by vulnerable people and action was necessary to protect them.