Chancellor Philip Hammond has a reputation for being a conservative individual, having once chosen the word ‘fiscal’ when asked to describe himself.  Today’s Budget was not one that would be described as particularly radical and in our summary below we comment on the impact of today’s announcements for the personal finances of individuals; we also note the Budget raises concerns for the UK economic outlook.

The Chancellor took technological revolution as his Budget theme.  He used the ‘T-word’ more than a dozen times in announcements ranging from an action plan to unlock £20bn of ‘patient’ capital to support British businesses, to investment in infrastructure for recharging electric cars and extra funds for schools to train more maths teachers.

Economic outlook

Such positivity about the future, however, failed to hide the challenges of the present.  The slowdown, which many economists had predicted in the aftermath of the referendum on the UK’s membership of the EU, now appears to be upon us.  In a jarring contrast with the Chancellor’s upbeat words on Britain’s place at the forefront of innovation, the economy’s dire productivity performance led to downgrades to GDP growth expectations for each of the next six years in the Office of Budget Responsibility’s (OBR’s) forecast horizon.  Disappointingly, the upgrade to 2.0% for 2017, announced by Mr Hammond in March, has been reversed – with growth now expected to be 1.5%.  While this growth is hardly spectacular, it is a pace which the OBR does not expect us to re-attain until 2021, with the economy forecast to expand by just 1.3% in both 2019 and 2020.

The news is only a little better on inflation, with the current level of 3.0%, a full percentage point above the Bank of England’s target, only expected to fall back to target by the end of 2018.

Finally, on the budget deficit there is some good news, with borrowing this year expected to be £49.9bn; £8bn lower than forecast in March.  At 2.4% of GDP, borrowing now looks likely to be within the 3.0% guide set by the EU Stability and Growth Pact for the first time in a decade.  Moreover, it is now forecast to fall to 1.1% of GDP by fiscal year 2022-23.

Tax and spending

With slow-growing productivity limiting long-term economic growth, few votes to spare in the House of Commons, and Brexit dominating the legislative agenda, the Chancellor had little room for manoeuvre.  In fact, he chose to scarcely manoeuvre at all, with little in the way of major changes that will impact the personal finances of individuals, other than perhaps a stamp duty exemption for first-time buyers on the first £300,000 of homes costing up to £500,000 (but no changes to stamp duty for more expensive properties).

Spending commitments were focused on housing, the NHS, and improving productivity through investments in infrastructure and technology.  Tax rises, usually a feature of post-election Budgets, were few and far between, other than the usual measures to counter tax avoidance and evasion to help balance the books, which almost inevitably raise less than expected.

There were no changes of note affecting pensions, ISAs or other core tax wrappers, or the tax on income and capital gains from investments (other than indexation allowance for corporations being frozen for capital gains from January 2018 onwards).  Concerns that the government might dramatically curtail the reliefs available to investors in tax-efficient investment schemes such as Venture Capital Trusts (VCTs) and Enterprise Investment Schemes (EISs) instead produced only a tightening of the qualifying criteria, introducing a ‘risk to capital’ condition that prohibits reliefs to schemes focused on capital preservation.  This will not have a material impact on any VCTs that we recommend, whilst it was pleasing to see an increase in the EIS investment allowance from £1m to £2m for individuals investing in “knowledge intensive” companies.

For companies, business rates will only rise with the generally lower CPI measure of inflation from next April onwards, offset slightly by more frequent revaluations, but there were no changes to VAT thresholds or National Insurance rates for the self-employed.  The government intends to consult (again) on simplifying the taxation of trusts, and we will monitor this closely as and when any further announcements are made.

The core allowances and exemptions for next tax year were confirmed as follows:


If you have any questions on the potential impact of the Budget on your finances, please do not hesitate to contact your usual adviser.


This note is for general guidance only and represents our current understanding of law and HM Revenue and Customs practice as at 22 November 2017. We cannot assume legal liability for any errors or omissions and detailed advice should be taken before entering into any transaction. The value of investments and any income therefrom can go down as well as up and you may not get back the full amount you invested. Levels and bases of, and reliefs from, taxation are those currently applying but are subject to change and their value depends on the individual circumstances of the investor. Saunderson House Limited is authorised and regulated by the Financial Conduct Authority.

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