The Chancellor has given his 2017 Autumn Budget speech and the experts are already calling some of the headline measures into question.
Under particularly scrutiny is the scrapping of Stamp Duty for first-time buyers.
Let's take a look at the reaction to Autumn Budget 2017 plus some of the things that were buried in the small print of the Budget book and not announced at the despatch box.
Stamp Duty cut to hinder first-time buyers?
In his Budget speech, the Chancellor said the scrapping of Stamp Duty for first-time buyers on property purchases up to £300,000 would help 95% of those looking to buy their own home.
However, the independent Office for Budget Responsibility (OBR) said it would actually push house prices up further, by 0.3%, and only lead to an extra 30,000 first-time buyers getting onto the property ladder.
Lower incomes
The Resolution Foundation thinktank said that the gloomy economic forecasts contained in the Budget mean that families' disposable incomes will be £540 lower by 2023 than they were forecast at the March Budget. It added that average pay won't return to its 2008 peak until the middle of the next decade.
Now let's take a look at what was hidden in the small print of the Budget book.
Savings freeze
In recent years we’ve become used to Budgets that tinker with savings and even launch entirely new ways to save but there was no mention of ISAs or savings incentives in this week’s speech.
The Budget book shows that the ISA allowance is to be frozen at £20,000 in the next financial year, the first time for many years that it has not been pushed up.
Junior ISAs and Child Trust Fund allowances will rise in line with inflation, meaning an allowance of £4,260 for each in 2018/19.
Pension allowance increase
A swirl of rumours before the Budget had suggested that there could be cuts to pension tax relief but in the end Hammond left well alone.
Simon Blowey, director of financial planning at Brewin Dolphin, said: “We were relieved that the Chancellor resisted the temptation to make major changes to the pension system, keeping the annual allowance at £40,000, encouraging people to save adequately for their futures.
“The lifetime allowance will increase in line with inflation from £1 million to £1,030,000 on April 6 next year and this is a blessed relief after the constant tinkering with the pension system that has gone before.”
State Pension to rise with the triple lock
It would have been major news if it didn’t, but the full Budget confirmed that the basic State Pension will increase by 3% in April next year thanks to the triple lock.
That’s an increase of £3.65 a week for the full basic State Pension. The benefits of the triple lock uprating will also be passed on to the poorest pensioners through an increase to the Standard Minimum Guarantee in Pension Credit to match the cash rise in the basic State Pension.
Changes for tax collections
The Budget included plans to reform the penalty system for late or missing tax returns, adopting a new points-based approach.
There are also plans to consult on how the Government could simplify and harmonise the penalties and interest charged on late payments.
Watch this space because if changes are made that could affect a significant number of self-assessment tax payers.
It’s also planning faster recovery of self-assessment debt from April 2019, relying on technology to recover debts closer to real-time by adjusting the tax codes of those also subject to PAYE.
Again, watch this space. There could be a major shake-up of the system coming soon.
Questions over the Rent-a-Room scheme
Under the current system it’s possible to earn up to £7,500 a year tax free by letting out a room in your home. That’s now going to be under review so Hammond can check the relief is being targeted at longer-term lettings.
What that almost certainly means is that the Government thinks the scheme might be helping people who rent out a room through the likes of Airbnb rather than to long-term renters.
That could mean a significant hike in costs in the future for people renting in the short term.
Boost to credit unions
For people on low incomes in particular, credit unions can be a key source of borrowing and keep people out of the hands of loan sharks.
They can also provide savings and other financial products to their communities, professions or even church groups.
The Government’s going to increase the number of potential members a local area credit union can serve from two million to three million.
IR35 questions
In April this year, the Government clamped down on off-payroll working arrangements in the public sector using rules known as IR35. That meant that people who work through companies for public bodies but are essentially employees had to be taxed like employees.
The government is now going to consult on doing the same for the private sector and will publish a report into this next year. Contractors everywhere will be bracing themselves.
Capital Gains Tax allowance rises
In line with inflation, the government is going to uprate the Capital Gains Tax annual exempt amount from £11,300 to £11,700.
Sean McCann, chartered financial planner at NFU Mutual, welcomed the news, saying: “This extra allowance is a welcome boost for investors and second property owners as it will allow them to keep more of their money when they realise their gains.
“It will be worth a combined £23,400 for married couples and civil partners who have the advantage of being able to transfer assets between each other without triggering a capital gains tax charge.
“Both spouses' annual exempt amounts can be used in full and potential tax bills can be cut further if one of the couple pays a lower rate of tax.”
What wasn’t in at all?
There’s always a fairly lengthy wish list before any Budget and this speech left quite a few special interest groups and commentators disappointed.
Here’s a quick rundown of what was missing completely from both the speech and the documents.
Tax simplification
A number of people had called for work to be done on simplifying the tax system and they have been disappointed.
Paul Falvey, tax partner at BDO, said: “62% of the businesses we polled before the Budget said they will be willing to pay more taxes in return for a simpler system. Yet, once again, the Government has done nothing to tackle the issue of tax complexity.
“It is a huge obstacle to growth and businesses will be disappointed that there was no commitment to setting out a coherent tax strategy.
Social care
There was no mention of social care costs in this Budget, even though our aging population make this a looming for the nation’s finances, both personal and more broadly.
Perhaps Hammond was loathe to touch the issue after the so-called ‘dementia tax’ hurt Conservative election prospects so severely at the last General Election.
What the Autumn Budget 2017 means for your money
Public sector pay
While the Budget included some extra cash for nurses, there was no commitment to increasing public sector pay, which has been frozen and then capped at 1% for the last seven years.
Individual departments may decide to allocate additional spending to pay but there was no commitment to boost wages from Hammond.
Gig economy
It’s a huge and growing section of current UK employment and so many commentators had expected action in this Budget to address the balance between employed and self-employed people.
However, a report published this week by the Work and Pensions Select Committee and the Business, Energy and Industrial Strategy Committee included draft legislation that would close the loopholes that allow companies to underpay workers and avoid taxes by forcing them onto self-employed terms.
What do you think should have been included and wasn’t? Or what was included but should have had more airtime? Have your say in the comments below.