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Autumn Budget 2017: who are the winners and losers?

Budget

The long-awaited Autumn Budget is upon us – after months of speculation, the government will set out its plans for our finances.

Chancellor of the Exchequer Philip Hammond will make his announcement at 12:30pm. We’ll bring you all the latest news – visit our Budget hub here.

Budget expectations

There were a few things we already know to expect, including:

  • An update on our economic performance
  • Plans to deliver 300,000 new homes
  • Student loan reforms, including a tuition freeze and a higher payment threshold
  • Incentives for millennials like an under-30s railcard
  • A review into passenger rights, following the collapse of airline Monarch

But bigger changes may be afoot, with Chancellor Philip Hammond reportedly facing pressure to deliver a bold, radical budget to win back public support.

Here are the key things that may affect your finances from today’s announcement:

Income tax
The personal tax threshold will rise from £11,500 to £11,850 from 2018/19 and the higher-rate tax threshold (those who will pay 40% tax) will rise from £45,000 to £46,350.

Housing
As well as confirming plans to deliver 300,000 new homes a year from 2020, the Chancellor also announced that stamp duty on homes under £300,000 will be abolished for first-time buyers. Normal rates will apply for the proportion of the value above £300,000.

The government estimates that 80% of first-time buyers will not pay stamp duty, saving around £1,660 on average. This change will kick-in overnight too – so good news for those of you who qualify for this relief.

The government will also put an extra £10bn into the help-to-buy scheme. The government expects this will help 135,000 more homebuyers.

Motorists
While the planned rise for fuel duty in April has been cancelled for the eighth year in a row, the Chancellor announced rises for Vehicle Excise Duty (VED) from April 2018. The first year VED rate for diesel cars that don’t meet the latest standards will go up by one band. The levy will fund a new £220m Clean Air Fund to improve air quality in cities and towns across the UK.

The government will also increase investment for driverless vehicles, announcing plans for a new £400m charging infrastructure fund. The Chancellor committed to clarifying the law on benefit-in-kind tax for those who choose to charge their cars at work.

‘Sin’ taxes
The Chancellor noted a freeze on alcohol duty for most ciders, wines, beers and spirits. However, high strength white ciders will be excluded from this duty freeze. And tobacco costs will continue to rise at inflation plus 2%.

We’ll bring you all the latest coverage as the day goes on, so check back for up-to-the-minute news.

Who is likely to benefit most?

In every Budget, there are winners and losers. While some groups will enjoy tax breaks and greater support, others are likely to see their bills creep up.

We called on the government to update on the delivery of the new pensions dashboard, which has been promised by spring 2019. While we didn’t see any mention of the pensions dashboard today’s Budget, we’ll anticipate an update on progress when the Minister for Pensions, Guy Opperman, presents on the project in the new year.

We’ll bring you all the latest coverage as the day goes on.

What do you think of the government’s latest Budget? And who do you think benefits most – and least – under the new plans?

Comments

Join the Which? Money team live at 3pm as they round up all the key news from today’s Autumn Budget: https://www.facebook.com/whichuk/

I wonder which side the Speaker of the House is on? 🤔

He allowed Labour to heckle throughout the Chancellor’s speech, but threatened the other side for a fraction of the disturbance.

Views on the gags, alfa? Did they work?

On-topic – I’m quite happy about this new railcard, I *think* this might mean a daily or weekly ticket will mean I don’t need to buy a season ticket – I now need to do the maths and decide whether or not I renew my season ticket before the January fare hikes.

@ldeitz, Lauren, wouldn’t you rather Which? was located near where you can afford to live, so the need for expensive commuting were reduced? (“you” is not personal, neither is “Which?”).

The problem with that idea, Malcolm, is that if all employers started to relocate to the country, the cities would eventually become giant parks and the areas to which the employers had relocated, giant cities.

I suspect a completely new approach is needed, which might include greater use of VR and tele-management, innovative transport systems, such as monorails, eradication of all oil-based fuel-burning engines and the possible re-purposing of the fairground roller coaster to a city transport infrastructure. That last could provide note merely a very cheap and well-proven system of transport but also a great fun way of getting to work.

But all employers would not. Reducing commuting would relieve the pressure on housing in over-populated areas and reduce the need for inefficient peak-time transport, as well as reducing traffic jams – if done sensibly and if we could only think long-term instead of up to 5 year chunks.

I see no reason why the majority of the Which? operation (just as an instance close to our hearts) needs to occupy expensive premises in a polluted city, at greater cost to its employees and members. At least Bristol (near Devon 🙂 ) was a bit of an improvement. Much of Yorkshire / Lancashire / Wales, as examples, have a lot to offer.

But you cannot be sure all employers would not, can you? The same a arguments Which? might deploy to argue against such a move could easily be deployed by others. There’s no logical reason at all why Parliament has to be in London, for instance, and if they moved to – say, Cornwall, then many other businesses might follow suit.

The point is that although I have argued in the past for Which? to move to a cheaper area in the UK if it began in earnest a very real change could occur, with land values, pollution, traffic jams and so on all rising in the new areas to meet the needs of the businesses.

You make a fair point @malcolm-r, the truth is that I don’t mind commuting into London – it’s what I’ve always done, both for university and my working career. Over the years I’ve seen it get increasingly more expensive and service standards not really get any better. With both myself and my other half commuting into London, it’s getting to the point that we could start driving… but then the traffic is pretty bad. The railcard will be helpful, but it’s not going to resolve the problems with my train line.

Ian, I don’t see a credible argument that “everyone would move”. They would not. London would become a pleasanter place to live and work and were a redistribution of employment ever to gain any momentum, a natural balance would come in to play.

@ldeitz. Lauren, I used to drive into a London suburb to work and the road ran alongside a railway line that my (then) future wife used to also commute. We both lived (separately) in the pleasant countryside outside the Metrolops. On a surprising number of occasions we used to see each other – and wave – partly because my piccalilli yellow Ford Cortina was a little conspicuous. I must say, it was the only highlight on my journey – jams, dirty, a waste of time, expensive in fuel and sometimes demeanour, and now I regret the number of people I must have poisoned. Hers was expensive, dirty, but at least she could read – in the days when the only mobile telephones were those being delivered in GPO vans, and computers were bigger than the carriage – that was the only activity, other than sociable conversation.

Malcolm, simply because you can’t ‘see a credible argument’ doesn’t mean that’s not what will happen. And natural balance, it can be argued, is precisely what’s caused London to become as heaving as it now is.

Interesting, that I have been given a thumbs down for pointing out the disrespect of some MPs when another is giving a speech, and being allowed to continue to get away with it. The Speaker of the House is supposed to be impartial which he very clearly wasn’t.

The budget was the usual smoke and mirrors, with very little given away. Lauren might benefit from the new railcard, and first time buyers have been given a short-term helping hand.

A crack-down on plastics is welcome and we will have to wait to see how that plays out.

I don’t agree with free car tax for electric cars, they still use roads, and should at least pay something towards their upkeep.

Overall, and without doing any sums whatsoever, it seemed to me the Chancellor announced a lot more spending without saying where this extra money was coming from.

alfa, whether MPs play to the audience when they are on tv I do not know. However, whenever I watch Prime Ministers Questions they behave in an appalling way for “grown ups”. What they think they achieve by shouting down their opponents beats me – very occasionally the same happens in Convos but our “speakers” generally tackle it fairly.

However, this bad behaviour does not happen in televised committee sessions, so perhaps it is simply all for show. It does seem a shame that our elected politicians of whatever party try to epitomise a “divided” country, and do not visibly combine forces to find best solutions to issues instead of seemingly picking constant arguments and displaying negativity. Would you run a commercial organisation thus?

I like the 100% council tax hike on empty homes, the threat to stop land banking by developers and the speed-up for Universal credit claimants but am not quite so happy with the appointment of the well-known racist (https://en.wikipedia.org/wiki/Oliver_Letwin#1985_Broadwater_Farm_memo_controversy), expenses fiddler and believer in fear as an instrument of productivity, Oliver Letwin, to chair a review regarding planning permission.

I also support the council tax hike on long-term empty properties in principle but there seem to be a number of loose ends, so it looked like window dressing to me.

I was concerned to see that it will be discretionary for councils to impose it and at what level. Some might slap a 100% excess on empty properties whether that is justified or not to loosen up the local property market while others might not, or might opt for a lower percentage.

I can’t trust all local authorities to exercise this power responsibly and equitably and some could just use it as a money-maker. I assume there will be exemptions for properties undergoing renovation, and those vacant after the death or other special circumstance of the owner. I thought councils already had some powers to deal with ‘nuisance’ empty properties and wonder what this measure will achieve. It could cause more complications than it is worth. The way to get more houses on the market is to build more houses; I suspect that ’empty properties’ is at best a marginal factor in most areas. Any sensible owner not wanting to occupy them would put them on the rental market – is that not incentive enough?

An example where such a penalty would not work fairly is when a property is bought to demolish it and develop the site, maybe into a better property or into multiple properties. It can take a long time to acquire the site, draw up acceptable plans and negotiate agreement with the local council. So there does need to be discretion, but sensibly applied.

Nimbyism is the biggest problem in countryside housing, which local planning authorities reinforce.

What’s your definition of empty?

Empty for 3,6,9,10 months a year? That’s a holiday home that brings much needed demand to countryside retail, food, and fam outlets.

It’s an interesting question, Martin, and each local council will presumably come up with its own arrangements. I think “empty” means vacant with no contents of any kind and not readily habitable.

I think the empty homes problem is mainly in urban areas where owners might be keeping property vacant hoping it will rise in value; alternatively they might not have the means to carry out improvement works and can’t afford to sell the property because its condition is substandard. In the first scenario I would have thought letting would have been worthwhile as producing an income and ensuring the property is looked after. In the second example I think the owner should just put the property up for auction and be shot of it unless they think they are going to come into a windfall in the foreseeable future. Paying double council tax on an empty property would be madness just adding to the existing liabilities.

Nimbyism wouldn’t be such a problem if developers had more consideration for existing home owners in the area.

But they cram as many soulless properties as they possibly can onto a piece of land, and where you previously had trees as an outlook, you can end up with an ugly wall staring at you in the face.

I came across an interesting article on the BBC News website giving a lot of information on why there are so many empty properties and the phenomenon of ‘buy-to-leave’ used by investors in new-build properties. The article is two years old now but still relevant –
http://www.bbc.co.uk/news/magazine-34930602

It says that “Despite widespread anxiety about a shortage of housing supply, there are 610,123 empty homes in England, according to the government. Of these, 205,821 have been unoccupied for six months or more, the official definition of “long-term” emptiness“.

It also comments on the difficulties many people have in funding the renovation of dilapidated property and the time it can sometimes take after the death of an owner to settle their estate and eventually dispose of the property but during which time it continues to deteriorate.

Looking at the summaries, it seems to have been a very “quiet” budget from a cash strapped chancellor.Much has been made of the falling growth rate with half a percent knocked off since March, and, of course there is three billion wasted on Brexit, which, whether one is for or against, will be spent on meetings, negotiations, legal wrangles and other adjustments for leaving. We could do as lot with three billion domestically. The stamp duty give-away has been equated with greed, since those who are selling are supposed to look on this as an excuse to add this saving on to the asking price for their property. Sadly, if it means that more people can access the housing market, then prices will rise and there is little regulation that anyone can put in place to stop this. More house building is half an answer.
Nothing visible to help students and nothing visible to penalise pensioners either, and that was threatened.
The national debt will increase, since the country can not survive on what it gets from its population. Applied to domestic households, this would end in disaster, somehow the country can spend more than we earn and the IMF is prepared to lend it to us. Despite this, our public services are under funded and we are living with the results that are obvious in daily life. Whether this is seen as preventable depends on which side of the commons one sits and how much borrowing makes sense to the various parties. I don’t suggest that this is a debate for these pages since we all have our own views on these matters and, probably, no consensus. Diesel is going to be an issue since cars have been, and are going to lose value. Increasing V.E.D. might encourage people to buy petrol and hybrid, but for many, me included, it means keeping what I’ve got for a lot longer, until the residual value is negligible. Hopefully, by that time there will be some viable electric alternatives and not too many people slaughtered when their self drive develops a mind of its own. Over all, I’m left with a slightly depressed feeling with the budget. Not, particularly that Mr Hammond could have done much more, but there is so much more to be done.

It might be Hammond’s last budget so he was determined to go out on a low.

Dorothy says:
22 November 2017

I’m baffled as to why Which is praising the stamp duty change. All the data shows that buyers will just use the money saved to bid up prices.It does nothing to get more people on the housing ladder. The main barrier is the huge deposit required.

I take the point about pushing up prices. However, to get a decent mortgage you need at least 5%, and preferably 10%, deposit – £12.5k to £25k on a £250+k house. Stamp duty would be another £12.5k+ so a very substantial part of the upfront money needed to be saved. I’m all for helping people on to the housing ladder this way if they can afford the repayments – it avoids them buying a house for a landlord in rental payments.

The key, in my view, is to make more modest 2 bed homes available, instead of the 4 bed family homes we see in our area built to sell at inflated prices by shoddy national builders, largely to make the best monetary return on the high cost of land. I’d also empower councils to buy land with compulsory purchase orders at more sensible prices on which to erect houses to rent, to help those who cannot buy or afford market rents. But keep them in their housing stock; abolish the right to buy – we need a right to provide a home to those in need.

Instead of knocking money off a purchase, wouldn’t it be better to encourage youngsters to save for a deposit and give them a cash incentive towards their property when they reach purchase stage?
i.e. if you save £25k for a deposit, get £5000 towards your purchase?

I can see merit in that, Alfa, so long as there are restrictions to prevent property speculation. There are bonuses available under the Help to Buy mortgage scheme and the Help to Buy ISA. The stamp duty exemption is a simple way of achieving the objective but does have side effects as people have commented.

The average deposit in the UK is £32k which is a lot of money. My partner is about to buy his first property so he will be benefiting from the exemption. A lot of people on social media have echoed what you’ve said here as well, they’re surprised there wasn’t more help for people to save for a deposit.

alfa, there is, I understand, a help to buy ISA that pays a 25% bonus from the government on a maximum of £12000 for a first time buyer. Assuming two people save as first timers, you can get a £6k bonus if you save £24k. The bonus is made available, I believe, when you exchange.

If you save in a help to buy ISA and now benefit from stamp duty exemption you could get help amounting to £18500 on a £250,001 home. That is a considerable contribution. Schemes that top up mortgage loans with government-backed loans simply lead to price-inflation, just as we found when lending to earnings ratios were relaxed. However, I wonder whether making “grants” to people who buy their first homes is really fair on the rest of the population who cannot possibly save to buy? Maybe, when the first house is sold, the “grants”! should be repaid and recycled back into the system to help others just starting out?

I would like to see land speculation stopped. The vast increase in the price of land simply because a council gifts planning permission should be curtailed, and maximum prices – a cap – placed on it. In addition, a prescribed proportion of 2 bed modest starter homes / flats / maisonettes should be mandatory on any new development so that we might begin to provide what many new buyers need to get them on the ladder.

I agree with you in general, Malcolm, but wonder why there is this fixation with building ‘affordable’ and ‘starter’ homes on every new development.

Builders should be allowed to build the houses they can sell. Generally people move up the property ladder and release smaller or cheaper properties as they go up. I don’t see why these properties cannot be the starter homes. Unless an area has a distinct shortage of cottages and small houses I see no need for a quota of lower cost properties being imposed. I can understand the concerns of property developers who complain that such requirements are actually stifling the supply of new homes and making higher value homes more difficult to sell on new estates. This knocks back down the chain.

I know generalisations are dangerous but there are places where there is an ample supply of small houses suitable for couples but the demand is for larger houses with three bedrooms and more space; meeting that demand is more difficult to achieve if there are artificial constraints placed upon the providers of new homes.

A quick check on a well-known property website shows that there are currently over 500 houses for sale in Norwich between £90K and £200K. There are another 380 houses on the market between £200K and £250K. Some of these are attractive three-bed semi’s in desirable areas and not requiring any immediate work before occupation. In addition to the houses there are over 230 flats in the range £90K to £250K for sale. The top-price flat in that range is described thus –
Stunning two-bedroom apartment in a prestigious riverside development with accommodation comprising light and airy communal glazed ground floor lobby with lift and stairs to second floor landing. Accommodation comprises hall, two bedrooms, bathroom and wonderful 22′ (maximum) open-plan lounge/kitchen/dining area. Benefiting from double glazed sash windows, electric heating and is presented in good decorative order. Outside there is one allocated secure parking space . . . situated close to the City centre with a good selection of shops, restaurants, bars and coffee shops, also within walking distance to Norwich railway station and Riverside development“. I can’t see why firms wouldn’t want to relocate to places like this and give their staff a better quality of life.

John, I have sympathy with your suggestions. I am probably coloured by the lack of such properties in the area we live. There is a lack of small houses at “affordable” prices. I agree in other parts of the country the situation may be different. Certainly 3 beds with more space is an aspiration, but getting a foot on the ladder is the start most people want. I’d just like to see some scheme where these were provided.

Yes, I can understand that. Anywhere close to a railway station feeding into London in an hour or less will be priced outside the starter home range, even for old two-up two-down industrial cottages with no hall and a ground floor bathroom.

In such areas the market does need to be primed and large developments just comprising starter homes would be the logical answer instead of the aspirational estates where 3-, 4-, and 5- bedroom houses with all the trimmings prevail and any modest properties are tacked on round the corner as if to say “We didn’t want to build these but were forced to by the council; what you see is all you get“.

The government has stated that a secondary benefit of building lots more new homes is that the increase in supply will ease the pressure on prices. Well not overnight it won’t. I think it will take several years until volume alone alters the price table unless there is a directed relocation of employment, investment in regeneration of depressed areas [and there are plenty], faster and more frequent public transport around major towns and cities outside the London & South East hotspot, and a sustained downward trend in population. There seem to be no plans for any of those things at the moment. Once the inertia is overcome it wouldn’t take much to get a rolling programme really rolling under its own momentum.

Maybe houses will be released due to the migrant exit due to Brexit that some predict? Somehow I don’t think this will have much effect as I believe those who are valued will find the UK’s position will not discriminate against them.

John s says:
23 November 2017

Totally agree, this will just push up prices. At the current rate of house price inflation it will only a take a few months for the saving on SDLT to be totally wiped out by increased prices.
If the government stopped throwing money at measures to boost demand and instead put the money into increasing supply it would be far more of a benefit to buyers. As it stands the goverment will need to come up with yet another headline grabbing scheme in a couple of years to help the next lot of buyers buy houses that have been artifically inflated by this and numerous other government incentives over the last few years.

Fabrizio says:
23 November 2017

I bought my first property in June, and obviously paid the stamp-duty. Would I have some sort of compensation?

Hi Fabrizio, that hasn’t been announced but it is looking unlikely that people would be receiving reimbursement for recent completions.

Compensation for what, Fabrizio? Are you out of pocket? You paid the going price at the time and the first £125,000 would have been exempt from Stamp Duty Land Tax. The government is not going to turn the clock back.

One item of the budget that I welcome is increased teaching of construction skills.

Perhaps one day, it will become mandatory for everyone you employ to work on your home to present their qualifications and restore faith in the industry.

Agreed. Apart from electricians and gas engineers for whom certain qualifications are compulsory most tradespeople have picked up their skills at their early customers’ expense. I find plumbers the most difficult to be entirely satisfied with and would never recommend one.

Whilst a developer I offered all unskilled staff one day a week to train for a trade. There were no takers.

Most British don’t want to work on a building site. That’s why so many are immigrant. Best rethink Brexit?

Was that paid or unpaid training, and was it at a training college or on-site?

David Taylor says:
23 November 2017

The Annual Allowance is a (bad) joke. Why should anybody be subsidised with tax relief to put £40k a year into their pension. This is just a transfer to the rich.

We need to encourage people to save up for their retirement, to take the load off the state. Allowing them to save out of tax free income is a good incentive, but it should be limited – to 20% and to an annual limit of say £20k. There is nothing to prevent them continuing to save, just take it out of taxed income. All public “servants” should be on a contributory scheme subject to the same rules as the rest of us – same retirement age, same contribution basis, with a fixed contribution from the employers comparable to private companies.

Can the empty property precept be applied to second / weekend / holiday homes in the country / seaside?

Local authorities used to give a discount on the council tax bill for people who owned a second home but this has gradually faded away to a mere 10% or none at all in many areas. The discount was in recognition that the second home was occupied for only a small percentage of the year so didn’t impose much of a burden on the public services like education, social services, and other services. But second-home owners still enjoy all the other benefits of highway maintenance, planning and environmental protection, refuse collection and disposal, street lighting. and street cleansing, etc, and I no longer see the need for a discount. However, whether there is a case for a surcharge I would doubt. It probably would not deter many second-home owners but could reduce the amount of money they might be inclined to spend in the local community. I don’t see the point of alienating second-home owners unless the uptake of second homes is leading to a genuine shortage of affordable properties for local people which is the case in a number of areas, particularly near the coast. Local authorities in such areas should use the higher revenues they are attracting to take action to provide sites for new housing aimed at local people. It is unlikely that a small house on an estate will appeal to the second-home owner who is looking for a former rectory or a quaint fisherman’s cottage [the cottage being quaint that is, not the fisherman]. Policy also has to recognise that many second-home owners have rescued dilapidated properties that were generally unwanted and neglected for years.

Certain areas have become unnaturally trendy and ridiculously expensive as a result of the second home phenomenon and imposing controls might just drive the prices up even further as they are only going to be affordable for the most wealthy owners. The character of some communities has changed out of all recognition through the weekly influx of second-homers but in many ways that has improved the prosperity of the area. It’s a tricky issue and not unconnected with overtones of envy in my opinion.

I do so agree .Second home ownership can sometimes destroy small, picturesque communities. Cornwall and Snowdonia are good examples where second home owners often move in in such numbers, outbidding locals, and either rent out their properties as holiday lets or leave them vacant for much of the year, either of which inevitably changes the nature of a tiny community.

Nothing to do with envy, but a real concern that local folk simply can’t afford the house prices when this happens.

Agreed, Ian. It’s not the local residents who show envy but the rabid commentators who feel that second homes should be universally banned, or taxed off the scale, as though owning a second property is somehow immoral. Owning a yacht or a second car does not seem to attract the same degree of opprobrium.

My parents had a second home for a few years. It was a large bungalow in a rural and rather uninspiring part of Essex a few miles back from the coast. I think they doubled the income of the local hardware store proprietor, provided lots of work for local builders, and spent lots of money in the over-priced village store. We used to have to go there every fortnight whether it was convenient or not just to mow the lawns and keep the place in good order so as children we hardly went anywhere else for a holiday. A twenty minute drive to Frinton was as good as we could get. Now that, due to road and vehicle improvements, the same travelling time will take you to North Norfolk the impact of second-home ownership has changed dramatically and every one feels it is one of life’s rights of passage, although I somehow doubt the next generation will be able to experience it so easily.

At the moment there is no threat to raise the council tax on second homes by 100% so councils will have to work harder to contain any problems they give rise to.

Regulation is the biggest cost of UK house building. Roughly 50% of construction cost is due to excessive regulation. If you want more affordable homes deregulate the industry.

Can you give examples Martin?