The Budget is a report presented each year by the Chancellor of the Exchequer to Parliament and the nation. The primary role of the Budget is to control public finances by setting out how much tax the Government will collect, how much the Government will borrow and how much the Government will spend. The Budget Responsibility and National Audit Act 2011 requires the Government to produce a Budget Report (which is the formal name for the Budget) for each financial year. The Charter for Budget Responsibility sets out what the Budget Report must cover.
When the Government publishes the Budget, the Chancellor gives a speech to Parliament in which he sets out the key decisions on tax, borrowing and spending, and his reasons for taking those decisions. This speech is known as the Budget Statement.
The official forecast on which the Chancellor bases the Government’s Budget is provided by the Office for Budget Responsibility (OBR). The Budget Responsibility and National Audit Act 2011 requires the OBR to publish two economic and fiscal forecasts for each financial year, including one published at the Budget. The OBR’s duty is to examine and report on the sustainability of the public finances and it is required to do so objectively, transparently and impartially.
PLEASE NOTE: This snapshot is not intended as an in-depth analysis of the Chancellor’s speech (we will leave that to the industry commentators and experts) but we hope this brief summary helps you gain a quick grasp on the key points delivered by the Chancellor from the dispatch box.
For full details of the following headlines (and more) you may wish to visit the HM Treasury website.
- This budget takes forward the plan for a brighter future and sets the platform for a stronger, fairer, more global Britain.
- This Spring budget will be the last
- The budget will only take place in the Autumn with effect from Autumn 2017
- From 2018 there will be a ‘Spring Statement’ but no major fiscal announcements
- The Chancellor announced adjustments to previous growth forecasts from those previously announced in the 2016 Autumn Statement.
- Growth forecast for 2017 – revised up from 1.4% to 2.0%
- Growth forecast for 2018 – revised down from 1.7% to 1.6%
- OBR borrowing forecast revised to £51.7bn for 2016/17 (£16.7bn less than forecast in the Autumn Statement)
- OBR borrowing forecast revised down to £58.3bn for 2017/18
- OBR borrowing forecast revised down to £40.8bn for 2018/19
Taxation / Welfare / Finance
- Business with less than VAT threshold turnover will have quarterly tax reporting delayed by 1 year.
- Business Rates – Series of measures to cut business rates by £435m
- Any business losing small business rate relief will be subject to a cap to lessen the burden
- £1,000 discount to all pubs with a rateable value of less than £100,000
- Fund made available to local authorities for bespoke hardship cases
- Long term, preferred approach to be set out in due course by the government with a view to more regular revaluation
- Personal allowance to rise to £11,500 from 2017 / £12,500 by the end of this parliament
- Higher rate of tax threshold to increase to £45,000 from 2017 / £50,000 by the end of this parliament
- Preliminary thoughts provided on the subject of moving towards employed and self-employed being treated equally for tax
- Corporation Tax to be cut to 17% by April 2020 as planned
- Class 2 NICs to be abolished / From April 2018 Class 4 NICs for self-employed to be raised to 10% with a further 1% increase in 2019
- Director shareholder tax free dividend allowance to be reduced from £5,000 to £2,000 from April 2018.
- New NS&I bond will pay 2.2% on deposits up tp £3,000 from April 2017
- National living wage to increase in April 2017 from £7.20 to £7.50
- Universal credit taper rate to be cut from 65% to 63% from April 2017
- £300m to support research talent on stem subjects.
- Ambition for UK to be a world leader in 5G – further £16m investment in digital infrastructure.
- Major projects to continue to be implemented across the Northern Powerhouse (£390m for North and £23m for midlands road network).
- Additional monies made available for low emission and driverless car technology.
- £350m for Scottish Government / £200m FOR Welsh government / £120m for incoming Northern Ireland executive.
Health / Education / Child Welfare
- 2017 will see the introduction of tax free childcare.
- From Sept, working parents with 3 & 4 year olds will get 30hrs of free childcare.
- Investment to be made in skills and education. New funding for a further 110 new free schools on top of the current commitment of 500.
- Free school transport to be made available to all children on free school meals who attend a free school.
- £216m over next 3 years to be invested into existing schools.
- T Levels to be introduced with 15 clear careers focussed routes / 16 to 19 year old students to have practical training time increased by over 50%. Additional £500m per year to be invested in 16 to 19 year olds.
- Education department to invest £140m in pilot projects for lifelong learning
- Care system placing pressure on NHS. £2bn grant funding pledged over the next 3 years for new social care packages in England / Green paper due later in 2017 on the subject of future financing of social care.
- Inappropriate A&E attendance – £100m capital available immediately for triage projects at English hospitals in time for next winter.
- No changes to fuel, alcohol and tobacco.
- Minimum excise duty of £7.35 on cigarettes.