Today Chancellor of the Exchequer Philip Hammond delivered his first Autumn Statement.
There weren’t many surprises, and Lisa Caplan, our head of financial advice, labelled it a “continuity Budget”.
What stays the same?
Additionally, the ‘roadmap’ for corporation tax isn’t going to change. Expectations that Mr Hammond would cut corporation tax to retain firms after Brexit were not met, so corporation tax will hit 17% by 2020, as planned.
And the tax free personal allowance is going to rise as planned to £11,500 by April 2017 – though we did learn that it will rise again to £12,500 by the end of this Parliament.
What’s new in this Autumn Statement?
Of course, we weren’t completely starved of excitement. Most interestingly for savers, we learned that next year’s Budget will introduce a three-year NS&I “investment bond”, to support savers. It is slated to carry an interest rate of 2.2%, with a £3,000 limit per saver. The window to invest will be open for one year. We’ll learn the exact details of that policy in Spring next year. It’s a policy designed to placate savers disappointed by continuing low interest rates.
In taxation, we learned that the threshold for the higher rate of income tax will rise from £45,000 to £50,000, a controversial policy for a cash-strapped government but one that will please those at the top of the basic rate tax band.
In wages, the national living wage will rise from £7.20 per hour to £7.50. If you can’t remember the differences between the National Living Wage and the National Minimum Wage, you’re not alone – the government has created a microsite to help the confused.
Other points of interest
Less relevant to Nutmeg and Nutmeg customers but still notable were the following:
- Letting agents will be banned from charging fees to tenants, causing Foxtons’ share price to fall by just under 15% by market close today
- The Autumn Statement was abolished – the Office for Budget Responsibility (OBR) will still report on the state of the economy and the government finances, but there will no longer be a major fiscal review every November
- £105m of Libor fines were given to charity
- The government committed to a range of public investments, including £1.4bn in 40,000 new affordable homes and £23bn via a new National Productivity Investment Fund
- New government support for FinTech, and for scaling businesses – both are welcome measures that could have accelerated Nutmeg’s growth while we were an early-stage business
The OBR revised down UK growth forecasts and predicted that Brexit has reduced potential UK economic output by 2.4 percentage points. As has long been expected, Mr Hammond has now formally relaxed George Osborne’s fiscal targets (a budget surplus by 2020-21) and has introduced a new, more relaxed set of rules.
So relaxed are these rules that Sky News Political Editor Faisal Islam suggested that the Conservatives’ fiscal stance is now softer than Labour’s.
Of course, there’s far more to be said than we’ve reported here. For those who like to dig into the detail, the FT has lowered the paywall on its main Autumn Statement summary, and the Treasury and OBR documents are in their usual places.
Risk warning: As with all investing, your capital is at risk. The value of your portfolio with Nutmeg can go down as well as up and you may get back less than you invest.