This spring’s Budget -is set to be announced on Wednesday 8 March 2017. The Chancellor Philip Hammond will only take about an hour to set out his plans, but the changes he announces could affect your wealth and opportunities for years to come.
In his speech, Hammond will be forced to confront the implications of last June’s Brexit vote, along with dealing with issues of reliance on consumer spending, business rates and government borrowing. The government also (quietly) announced on Monday night that it will be asking ministerial departments to outline cuts up to 6 per cent, a potential nod for what’s to come next week.
All these things, along with the fact the Chancellor Philip Hammond is scrapping the spring Budget, meaning this announcement should be an interesting one.
The Chancellor will potentially stick to the three key changes he made from George Osborne’s former financial commitments, according to The Sun. These consist of not predicting a surplus in 2019/20, slightly relieving the cap on welfare spending and no longer committing to reducing debt. The paper also predicts he’ll announce a change to the controversial business rates that were recently released, that could leave “shopkeepers and publicans clobbered with tax hikes of up to 400 per cent”.
Here are some other expected announcements:
The big story at the moment focuses on borrowing. The Resolution Foundation has predicted that healthier-than-expected tax revenues and the lack of a Brexit effect so far will lower Budget borrowing forecasts by £29bn between 2015-16 and 2020-21.
The FT reports a possible £3bn reduction in borrowing, to £67bn. They also pin this optimistic prediction to higher-than-average self-assessment tax receipts, after changes in the taxation of dividends.
Grammar schools are back. The Tories are set to use £320m to launch more free schools, many of which will be able to open as selective grammar schools. This will only be possible if the government can repeal the ban set by former Prime Minister Tony Blair’s government. The reemergence of the grammar schools debate has been a particularly heated one, with Shadow Education Secretary Angela Rayner calling the actions “disgraceful” and a “vanity project” on the Today programme.
The Conservatives are also predicted to announce that skills training for 16-19-year-olds is set to get a boost of £500 million, according to the Mirror.
The amount people are able to earn untaxed will rise. Personal allowance is set to go up by £500, from £11,000 to £11,500. This means that no tax will be paid on income up to £11,500.
However, the Telegraph reports that Hammond will raise taxes as a way to support welfare spending.
State pension will rise by 2.5 percent in April, a change initially introduced by George Osborne in 2010. This means weekly pension will go up from £155.65 to £159.55.
Freezes across the board. Child benefits will be receiving a real-terms cut as they are frozen at £20.70 a week for the first child, and £13.70 for any following children. Tax Credits/Universal Credit will also be frozen for the year 2017/2018, resulting in a similar cut. Finally, Unemployment Benefits will also be frozen, another hit to under-25s who will already be receiving a lower rate anyway.
What do we know for sure?
The government has announced a few key changes in in advance of the Budget.
- The Spring Budget 2017 will be the final Budget held during springtime
- Finance Bill will follow the Budget, as it does now
- From 2018 “Legislation day” will move to the summer
- An Autumn Budget means tax changes will be announced well in advance of the start of the tax year
- 2018 will see the first Spring Statement