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Autumn Budget 2017: what we know so far

The Chancellor of the Exchequer Philip Hammond will today lay out the government’s plans for our finances in an Autumn Budget. So what can you expect to see change? Hammond will take to the dispatch box at around 12.30pm on 22 November, following Prime Minister’s Questions.

Here, Which? rounds up what we already know will be in the Budget, along with the most widespread speculation about what is likely to be announced. Which? Money will be bringing you everything you need to know about the 2017 Autumn Budget – check back for up-to-the-minute coverage.

What will be in the Autumn Budget 2017

It’s impossible to say precisely what today will bring, but this is what we know so far about the Chancellor’s speech:

An update on the economy

The Chancellor usually starts with an update on how the economy is performing, with figures supplied by the Office for Budget Responsibility (OBR). Hammond will report on growth, borrowing and debt compared to a year ago, as well as the OBR’s future forecasts.

Plans for 300,000 new homes

Hammond told the BBC’s Andrew Marr Show that his Budget would contain plans to build 300,000 new homes a year in England. Saying it was ‘not acceptable’ that young people struggle to buy a home, he confirmed the government would focus on speeding up developments where planning permission was already in place.

However, it’s not clear how many of the homes being built will fall under an affordable housing scheme[1] and how many will be social housing. It’s also likely the chancellor will confirm the prime minister’s pledge to extend the Help to Buy Scheme[2] with an extra GBP10bn of funding.

Student loans shakeup

Student loans[3] will also feature in the Budget, in a move to win back younger voters. At the Conservative Party Conference last month, Prime Minister Theresa May pledged to freeze tuition fees at GBP9,250 and raise the income threshold at which student loans are repaid from GBP21,000 to GBP25,000.

The Tories will also fix a glitch that means thousands of people repay more than they need to on their student loan. It’s estimated that 86,000 people overpaid their student loan in 2015-16, due to poor communication between the Student Loans Company and HMRC. The Student Loans Company is responsible for monitoring how much is left to pay, while HMRC is responsible for taking repayments – but HMRC’s records only get updated once a year.

The Chancellor will pledge to have a better system in place by April 2019 to ensure HMRC and the Student Loans Company can share data more effectively.

New ‘Millennial Railcard’

The Chancellor is also set to announce a new ‘Millennial Railcard’ for people under 30, according to The Times. The card, which is likely to cost GBP30, will offer a third off the price of train tickets – similar to other schemes, including the young person’s railcard for 16-25 year olds. The scheme is tipped to help 4.5 million young adults save on rail fares from spring 2018.

Review of passenger rights

It’s expected that the Chancellor will announce a review into better consumer protection for airline passengers, according to The Times.

This follows the collapse of airline Monarch, which left 110,000 passengers stranded. An independent chairman will head up the review, which will focus on the ‘uneven’ consumer protection for passengers.

What might be in the Autumn Budget 2017

Here’s some of the most plausible speculation we’ve seen in the lead-up to the announcement.

Schedule for income tax cuts

The government has previously pledged to raise the personal allowance for income tax[4] to GBP12,500 by 2020-21. At the moment, the threshold still stands at GBP11,500, so it’s possible the Chancellor will set out how the increase in the personal allowance will be scheduled going forward.

The threshold for the higher rate of tax is due to increase to GBP50,000 by 2020-21. Currently it stands at GBP45,000, except in Scotland where it’s GBP43,000. Again, the Chancellor could use this opportunity to announce a timeline for next year.

National insurance revamp

In the Spring Budget, the Chancellor announced a plan to scrap class 2 national insurance contributions[5] (NICs) and hike class 4 NICs for the self-employed from 9% to 11%.

Hammond was forced to abandon the plan as it went against a 2015 manifesto pledge not to increase taxes. But the Conservative’s 2017 manifesto made no such promise, so the Chancellor may choose to tinker with NICs again. It’s rumoured that this could include a cut in the costs for younger workers funded by changes to pension tax relief – but it’s also possible that the Chancellor will revive his plans to change self-employed NICs.

Pension tax relief cut

There’s talk that the Chancellor is plotting a raid on older workers to fund tax breaks for younger people.

The Telegraph has reported that Hammond wants to ‘restack the deck for the next generation’. The plan – which is being called the ‘tax on age’ – could see pension tax relief[6] cut for older workers to fund a reduction in NICs for workers in their 20s and 30s.

Stamp duty shakeup

There has been widespread speculation that the Chancellor could scrap stamp duty to help first-time buyers. The average home in the UK costs GBP226,000 according to the Office for National Statistics (ONS), which means typically buyers have to pay over GBP2,000 in stamp duty.

Hammond has been dropping hints the tax could feature in his speech. He told the BBC: ‘We recognise there’s a challenge there and on Wednesday I shall set out how we intend to address it.’

Fuel duty increase – for some

Fuel duty has been frozen for the last six years, but it’s rumoured the Chancellor is planning a hike. The Petrol Retail Association believes the Treasury is looking to raise diesel fuel duty by 1p per litre from 57.95p per litre to 58.95p per litre, but will cut petrol duty by 1p per litre.

Hammond is also reportedly considering a tax on new diesel cars, according to the Financial Times.

U-turn on universal credit waiting period

The government has come under intense public and political pressure to cut the six-week waiting period for universal credit, which critics claim could leave families destitute. The Sunday Times predicts Hammond will give in to the pressure and reduce the waiting time to 31 days.

Tax relief cut for investors

After major changes to pensions and buy-to-let mortgage tax relief, tax consultants RSM predict that investors could be the next target. The Enterprise Investment Scheme (EIS) provides 30% tax relief for investments in high-risk companies as well as capital gains tax relief on disposal of the shares after a set period.

Since it was introduced in 1994, GBP15.9bn has been invested, helping around 26,000 companies. But critics of the EIS see it as a way for the wealthy to avoid paying up to GBP300,000 of tax, so it’s possible the November Budget could set out changes. RSM predicts this could mean cutting the relief from 30% to 20% and increasing the period EIS shares have to be held.

Which?

Money will be bringing you all the latest from the Autumn Budget – check back to see what changes are announced and what they mean for you.

References

  1. ^ affordable housing scheme (www.which.co.uk)
  2. ^ Help to Buy Scheme (www.which.co.uk)
  3. ^ Student loans (www.which.co.uk)
  4. ^ personal allowance for income tax (www.which.co.uk)
  5. ^ national insurance contributions (www.which.co.uk)
  6. ^ pension tax relief (www.which.co.uk)

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