BUDGET SUMMARY NOVEMBER 2017
WHAT THE
BUDGET COULD MEAN FOR
YOU CHANGES TO PENSIONS, TAX, SAVINGS AND INVESTMENTS AND COST OF LIVING.
PENSIONS LIFETIME ALLOWANCE TO INCREASE
As announced in the previous Budget, the maximum value of benefits you can take from your pension without incurring extra charges, known as the Lifetime Allowance, will increase in line with CPI, rising to £1,030,000 for 2018-19.
£1,030,000 LIFETIME ALLOWANCE FROM 2018.
£40,000
NO CHANGES TO PENSION TAX RELIEF AND ALLOWANCES The Tapered Annual Allowance remains in place, and the previously announced reduction in the Money Purchase Annual Allowance from £10,000 to £4,000 remains for 2018/2019. The standard Annual Allowance also remains at £40,000.
The standard Annual Allowance remains the same.
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Pensions
STATE PENSIONS TO INCREASE
The new State Pension will increase from £159.55 to £164.35 in April 2018. Those who reached State Pension age before 6th April 2015 will see an increase to the basic State Pension from £122.30 to £125.95 a week.
The ‘triple lock pledge’ means that the basic State Pension will rise each April until 2020 to match whichever is highest between inflation, average earnings growth or 2.5%.
This 3% rise under the ‘triple lock pledge’ was triggered by the inflation rate of 3% in September 2017.
£125.95
If you’re unsure about your options at retirement find out more on our website.
PER WEEK Basic State Pension amount from April 2018.
£164.35 PER WEEK New State Pension amount from April 2018.
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SAVINGS AND INVESTMENTS ANNUAL ISA ALLOWANCE REMAINS UNCHANGED
£20,000
The annual ISA allowance will remain unchanged, meaning savers will be able to pay up to a maximum of £20,000 per year into their ISA for 2018/2019.
ANNUAL ISA ALLOWANCE.
SAVE AS YOU EARN SCHEME AND PARENTAL LEAVE From 6th April 2018, employees on parental leave will be able to take a break from saving into their Save As You Earn scheme for up to 12 months – increased from 6 months currently.
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The Save As You Earn Scheme allows employees to buy shares in their employer company at a fixed price.
TAX STAMP DUTY RELIEF FOR FIRST TIME BUYERS First time buyers will no longer have to pay stamp duty when buying a home for up to £300,000 – with immediate effect. For properties worth up to £500,000, stamp duty will not be paid on the first £300,000.
£300,000
This measure does not apply to Scotland, as SDLT was devolved to Scotland on 1st April 2015. This measure will apply in Wales until 1st April 2018, when the powers will be devolved to Wales.
the price above which a property becomes liable for Stamp Duty for first time buyers.
This change is intended to support young people buying their first home and encourage people to get on the property ladder.
NEW FREEDOMS FOR COUNCILS TO CHARGE A 100% PREMIUM ON EMPTY PROPERTIES
Councils can now charge a full 100% council tax premium on empty properties – compared to the previous 50%.
The Government hopes this will help tackle housing issues, by encouraging owners to bring their empty properties back into use.
100% The council tax premium local councils will be able to charge on empty properties.
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Tax
PERSONAL ALLOWANCE TO INCREASE
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The personal allowance – the amount you earn before you start paying income tax – will rise from £11,500 to £11,850 for 2018/2019. The higher rate threshold will also rise to £46,350 – meaning those earning this amount or above will pay the higher rate of tax at 40%. The higher rate tax threshold can be lower for those with income above £100,000.
We welcome any changes that help people save more, and make it easier to do so. The increased personal allowance combined with changes to a number of other savings allowances will allow some people to receive up to £19,850 in income from savings tax-free. Increasing the personal allowance is a start to helping to fill the savings gap.
“
Bernadette Lewis, Financial Planning Manager, Scottish Widows
The income tax positions for Scotland will be published when Scotland’s Budget is finalised.
£11,850
£46,350+ FROM APRIL 2018
the amount you can earn before you have to pay tax from April 2018. the amount you have to earn before you pay higher rate tax.
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Tax
BUSINESS TAX
VAT THRESHOLD STAYS AS IS
The VAT registration threshold will stay at its current level of £85,000 for the next two years from April 2018.
£85,000 VAT registration threshold.
A BREAK FOR SMALL BUSINESSES Business rates will switch to being increased by the Consumer Price Index (CPI), instead of the Retail Price Index (RPI), 2 years earlier than planned.
Business rates currently rise by the RPI, a different way of measuring inflation, which tends to be higher than the CPI.
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COST OF LIVING NATIONAL LIVING WAGE From April 2018 the National Living Wage will rise from £7.50 to £7.83 per hour for workers aged 25 or over.
£600
National Minimum Wage rates will rise across the board. The Low Pay Commission estimates that this increase will benefit 2 million workers.
The extra amount a full time worker on the National Minimum Living Wage will be earning from April 2018. Source: gov.co.uk, 22nd November 2017.
ALCOHOL AND TOBACCO Duty rates on cider, wine, spirits and beer will be frozen – however duty on still cider and perry will increase in 2019.
Duty rates on tobacco products will increase by 2%, whilst rates for hand rolling tobacco will increase by a further 1% with immediate effect. The Minimum Excise Tax for cigarettes will also rise to £280.15 per 1,000 cigarettes.
This means that the average price for a pack of 20 cigarettes will go up by 49p.
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TRANSPORT FUEL DUTY STAYS THE SAME
Fuel duty will remain frozen for the 8th year in a row, as part of The Government’s plans to support transport by investing £2 billion in 2019.
£2 BILLION
This means the price of fuel will stay the same, saving drivers £160 a year on average. Source: gov.co.uk, 22nd November 2017.
the amount of money set aside for transport in 2019.
A RISE IN VEHICLE EXCISE DUTY FOR THE MOST POLLUTING CARS Drivers of cars that don’t meet the latest emissions standards will see their vehicle go up a tax band from April 2018. This doesn’t apply to vans.
This could cost diesel drivers anything from £20 to £500 a year. Source: gov.co.uk, 22nd November 2017.
A NEW RAIL CARD FOR YOUNG PEOPLE valid for one year and will offer users a 34% discount, the same as the current 16-25 railcard.
From Spring 2018, a new rail card will be introduced, offering a third off rail fares for people aged 26-30. The new card will be
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Transport
THE FINANCIAL FUTURE OF CARS
The Chancellor has pledged a £100 million investment to help people buy electric cars. A further £400 million has been put aside to further develop a network of charging points across the UK. Employees who charge their cars at work, will not incur a benefit-in-kind charge on the electricity used.
The Government has said the investment in electric cars is the first step in seeing driverless cars as the future vehicles of Britain’s roads by 2021. Philip Hammond also unveiled that the UK will set out rules so that self-driving cars can be tested without a safety operator.
£400 MILLION has been put aside to set up a network of electric car charging points across the UK.
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Watch Pension expert Robert Cochran’s initial review of the Budget and what it could mean for you.
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Continue the #Budget2017 discussion online now.
Scottish Widows
@scottishwidows
Scottish Widows
Every care has been taken to ensure that this information is correct and in accordance with our understanding of the law and HM Revenue & Customs practice, which may change. However, independent confirmation should be obtained before acting or refraining from acting in reliance upon the information given. This information is based on announcements made in the November 2017 Budget which may change before becoming law.
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27296 11/17 Scottish Widows Limited. Registered in England and Wales No. 3196171. Registered office in the United Kingdom at 25 Gresham Street, London EC2V 7HN. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Financial Services Register number 181655.
