Philip’s Budget Thoughts
The Key Issues
After weeks of anxiety small business are relieved to find they were not hit hard in the Budget. Dropping the suggestion of bringing the VAT registration limit to as low as £20,000 has saved many businesses from a sea of red tape and form filling. It also allows the smallest businesses who sell to the general public to stay competitive. The other bonus for business is the advancement of the change to the way the annual increase in business rates is calculated. The Consumer Price Index (CPI) is considered to be more accurate than the Retail Prices Index (RPI) and rises more slowly. The change to the CPI basis was to go ahead in 2020 but has been brought forward to April 2018.
The abolition of stamp duty for first time buyers on property up to £300,000 (£500,000 in London) is a welcome encouragement to help the young on to the property market. This will surely boost the property market for affordable homes which will have a knock-on effect for the construction industry and all connected service suppliers. An average saving of £750 for first time buyers in our region could see that boost the local economy.
For basic rate tax payers, the increase in the tax free personal allowance to £11,850 from next April will result in a tax saving of £70 a year. When combined with changes to the National Insurance threshold individuals earning £30,000pa will have an overall annual saving of £101. For higher rate payers the benefits of the increased personal allowance and the rise in the 40% threshold will reduce tax bills by £340pa. However, this will be tempered by an increase in National Insurance so that, for example, those earning £50,000pa will have a reduced saving of £236pa.
As well as help for first time buyers, the promised benefits for the younger generation include the introduction of a new 26-30 Railcard. With increased spending on the NHS including nurses pay, an overhaul of the universal credit benefit system, investment in maths teaching and investment in inner city housing schemes the Government are clearly trying to reach out to all sections of the community. Only time will tell if they are successful.