Autumn Budget 2017: Our key takeaways

Our key takeaways for investors: Stamp duty, EIS and more

On Wednesday, the Autumn Budget 2017 was presented by Chancellor Philip Hammond, outlining changes to stamp duty for first time buyers across the UK alongside changes to the rules for EIS and VCT investments.

Below we cut through the noise and share with you our key takeaways from the Autumn Budget 2017 for investors, and summarise the details of those changes.

Stamp Duty

Stamp Duty Land Tax will only become applicable for first time buyers if the property is worth more than £300,000, though the relief will not apply if the property is worth more than £500,000. The Government estimates that this will save four out of five first time buyers purchasing property in England, Wales and Northern Ireland up to £5,000 in stamp duty; at present there is no change for those buying in Scotland. Should you be a first time buyer, our complimentary guide providing inside knowledge and expert tips on moving house for the first time and getting back on the savings ladder, created in partnership with Aspire, is available to download below.

Changes to EIS and VCT

Following a wider consultation process regarding the access to finance for innovative firms, the Government is making changes to the rules for EIS and VCT investments. The intention of the changes are to redirect investments from ‘capital preservation’ EIS and VCT to growth-orientated and ‘knowledge-intensive’ companies.

The rule changes include:

  • An increase in the annual investment limit that ‘knowledge-intensive’ companies can receive under EIS and VCT schemes. This could widen the range of companies that could be considered for this type of investment. Whilst there will be a focus on ’knowledge-intensive’ companies, investments in genuine entrepreneurial and independent ventures, those seeking long-term growth, will continue to be supported.
  •  The annual investment limit for income tax relief on EIS investments will be doubled from £1m to £2m from April 2018 onwards, as long as the additional £1m is invested in ‘knowledge-intensive’ companies.

Further consideration is being given to the possibility for pension funds to invest in innovative firms with long-term growth prospects.

Corporation Tax on Capital Gains

There has been an update to corporation tax on capital gains. This could have a (relatively small) impact on those individuals holding investments through a company structure.  Currently, companies only pay corporation tax on capital gains once inflation has been taken into account, however from April 2018, no further inflationary increases can be applied when calculating the gains.

Personal Tax Allowance

Hammond announced an increase to the personal income tax allowance, raising the current basic rate allowance to £11,850 from April 2018 and the higher rate tax band to £34,501 – £150,000 respectively.

For an overview of tax allowances and any changes in light of the autumn budget 2017, please see our table below.

Type of Allowance

Current 2017/18 Allowance

New 2018/19 Allowance

Comments

Personal income tax allowance

£11,500

£11,850

Intention to raise Personal Allowance to £12,500 by 2020

Higher rate income tax band

£33,501 – £150,000

£34,501 – £150,000

Intention to raise Higher Rate Tax band to £37,500 by 2020

Additional rate income tax band

Over £150,000

Over £150,000

No change

Capital Gains Tax Annual Exemption

£11,300

£11,700

n/a

ISA allowance (Lifetime ISA))

£20,000 (£4,000)

£20,000 (£4,000)

No change

Junior ISA / Child Trust Fund allowance

£4,128

£4,260

CPI increase

Pensions Lifetime Allowance

£1,000,000

£1,030,000

CPI increase

Inheritance Tax Nil Rate Band

£325,000

£325,000

No change

Residence Nil Rate Band

£100,000

£125,000

As previously announced

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