Philip Hammond will deliver his inaugural Autumn Budget as the Chancellor of the Exchequer, on Wednesday 22nd November.
Although we’ve already had a Spring Budget, which announced the change to an annual Autumn Budget, it’s possible that the Chancellor will look to shake things up to provide a shot in the arm for national economy.
Let’s look at some of the potential changes Mr Hammond could look to introduce in the House of Commons next month:
Experts within the housing industry believe stamp duty is deterring home movers from moving up the housing ladder, placing undue pressure on the UK housing market. That’s proved by record revenues of stamp duty, while property sales have declined in recent months.
Reports suggest the Chancellor may look to remove stamp duty for older homeowners, encouraging them to move or downsize to free up larger homes for growing families across the country. Leading homebuilder, McCarthy & Stone suggested by empowering pensioners to downsize it would free up housing activity worth £186m to the national economy.
Alternatively, Mark Farrar, Chief Executive, the Association of Accounting Technicians (AAT), believes Mr Hammond should not rule out switching the liability of stamp duty from buyers to sellers. Farrar believes this would “help more people get on the property ladder, help those moving up the property ladder, increase the amount of house purchase whilst maintaining the substantial multi-billion-pound revenue for the Exchequer.”
The AAT is also backing the development of the Apprenticeship Levy to enable funding for skills as well as apprenticeships, resulting in the renaming of the levy to the Skills Levy.
“The UK’s skills needs extend well beyond the scope of apprenticeships, and it is important to ensure the introduction of the levy ultimately recognises the varying requirements of different sectors and is aligned with industrial strategy,” said Farrar.
“Increasing the flexibility of the levy would foster improved productivity across the whole workforce, deliver greater value for money and yet have no significant revenue implications for the Exchequer.”
Enterprise Investment Scheme (EIS)
Recent changes to pension contributions and buy-to-let mortgage interest relief have led to some predicting that the Chancellor could look to hit the EIS next. This provides tax relief up to 30% for investments in high-risk companies as well as exemption from Capital Gains Tax on the disposal of shares beyond a specified period.
Since its implementation in 1994, the EIS is said to have encouraged investment totalling £15.9bn in more than 26,000 high-risk companies. However, some believe EIS is used by wealthier individuals to avoid paying upwards of £300,000 in tax.
The EIS is already under review along with the Seed Enterprise Investment Scheme (SEIS) and it’s thought the Chancellor may look to cut tax reliefs from 30% to 20%.
Self-employed National Insurance contributions (NICs)
In March, the Chancellor was forced into an awkward U-turn on the abolishment of Class 2 NICs and subjecting self-employed individuals to Class 4 NICs, rising from 2018. However, a new report from the Organisation for Economic Co-operation and Development (OECD) suggests the argument for increasing self-employed NICs could rear its head again in the coming weeks.
The OECD has called on the UK government to revive its abandoned plans to increase NICs for the self-employed to “improve fairness in tax policy and reduce risks for the financing of the social insurance system”.
However, in July, Downing Street ruled out the prospect of any rise in self-employed NICs, stating that the government is ‘not going back’ to their previous proposals.
Pension tax relief
The UK government opted to maintain the state pension triple lock earlier this year which could place pension tax relief at risk in the upcoming Autumn Budget 2017.
Under the current system, relief is linked to the income tax rate of an individual saver. Therefore, higher rate tax payers get pension tax relief at 40% and those on the basic rate are given relief at 20%. It is reported that the Chancellor is weighing up moving to an overall flat rate of 33% - a change that would hit middle income professionals hardest.
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