Chancellor Philip Hammond was very upbeat in his Budget statement despite downgraded OBR forecasts for the UK economy. Productivity growth and business investment estimates were also revised down.

UK GDP is now expected to grow by 1.5% in 2017 (previously estimated at 2%), 1.4% in 2018 and 1.3% in both 2019 and 2020 – before picking up to 1.5% in 2021 and 1.6% in 2022.

From a personal finance perspective, positive news includes a prediction that the annual rate of CPI inflation would peak at 3% in the current quarter and progressively fall to the Bank of England’s 2% target over the next year.

The National Living Wage will increase by 4.4% to £7.83 from April 2018. That is good for workers but bad news for companies with large staff numbers including retailers who are already under pressure from difficult trading conditions.

The Government says its Budget will reduce costs of living as well as boost wages. From April 2018, it will increase the personal allowance to £11,850 from £11,500 which is the amount you can earn before paying income tax. The Government had already pledged to lift the personal allowance to £12,500
by 2020/21.

The threshold at which the 40% higher rate of tax is applicable will increase in April 2018 to £46,350 from £45,001. The Government says this change will result in a typical taxpayer paying at least £1,075 less tax than in 2010/11.

The headline annual ISA contribution limit will stay the same at £20,000. However, anyone saving into a Junior ISA will benefit from a higher annual subscription limit of £4,260 versus the current £4,128 level.

Stamp duty has been immediately abolished for anyone buying their first home worth up to £300,000. In higher price locations such as London first time buyers won’t pay stamp duty on the first £300,000 for properties worth up to £500,000. The Government says 80% of first-time buyers will pay no stamp duty at all as a result of this rule change.

Enterprise Investment Scheme (EIS) investment limits will be doubled for technology and other ‘knowledge intensive’ sectors, while ensuring that EIS is not used as a shelter for low-risk capital preservation schemes.

Finally, a freeze on short-haul air passenger duty is welcome to people who like to holiday abroad. Long-haul duty will also be frozen for economy passengers.

Yet it isn’t good news for anyone who flies premium economy, business or first class as duty will increase by £16 or an extra £47 for anyone travelling by private jet. Yet let’s face it, if you can afford a private jet the extra duty charge is hardly going to break the bank. (DC)

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