What happened in the Budget 2017
It began with some negative comments on economic growth forecasts over the next few years but let’s forget about the negative and talk about what happened in the Budget 2017.
All in all it was a pretty quiet affair with the headline being the abolishment of Stamp Duty on homes under £300,000 for first time buyers. If you’re a first time buyer and lucky enough to be able to afford a home between £300,000 and £500,000 then you won’t pay Stamp Duty on the first £300,000 either.
Time will tell if this will actually help first time buyers get on the housing ladder and in fact the Office for Budget Responsibility believe this measure could increase house prices.
What happened in the Budget from a financial planning point of view
Here are the key highlights that will take effect in the tax year 2018/19.
- The amount you can earn before being taxed (called the personal allowance) will rise to £11,850.
- The level of gross income at which you will start paying higher rate tax at 40% will rise to £46,350.
- For those of you taking dividends out of your business or investment portfolio, the dividend allowance will be reduced from £5,000 to £2,000.
Capital Gains Tax
- The tax you pay on sale when you have made a gain over the allowance.
- The Capital Gains Tax allowance will increase to £11,700.
- Remember this is per person so if you own an asset jointly with your spouse or partner, you will have an allowance of £23,400 in total.
- The allowance before any Inheritance Tax is charged (called the nil rate band) will remain at £325,000.
- The new allowance for family homes (called the residence nil rate band) will increase from £100,000 to £125,000.
- This means a married couple passing their family home on to their children could benefit from up to £900,000 worth of allowances before paying any Inheritance Tax.
- The annual amount you can pay into ISAs will remain at £20,000.
- Thankfully no tinkering with pensions for a change!
- The total amount of pensions you can accumulate during your lifetime (called the lifetime allowance) before facing further tax charges will rise from £1,000,000 to £1,030,000.
Overall the fact that not much was changed from a financial planning point of view is a good thing. It allows us to plan with certainty over the next year.
If you would like some help in understanding how the Budget 2017 affects you then please give us a call. It may only take a phone call to put your mind at rest.
Stock market linked investments and any income from them, can fall as well as rise and is not guaranteed. Any figures quoted are for illustrative purposes and should not be taken as a forecast or guarantee. Past performance should not be seen as an indication of future returns and clients may get back less than they have invested.