Budget 2017: What it means for your wallet

'The test of a Budget is how it affects people’s lives'

The Chancellor has dangled a number of incentives to win back younger voters (Getty)

It’s a fusty affair, the delivery of a Budget, but over the years some announcements have had more substance, delivered with more showmanship, than others.

This autumn, you’d be forgiven for thinking that this one, contrary to the pundits predictions, was one of the more punchy of Chancellor Phillip Hammond’s speeches, bringing with it promises of far-reaching plans that will quickly make a tangible difference to our money matters.

But will they? Here’s what you need to know about #Budget2017.

First-time buyers and homeowners

It would be remiss not to start with the big reveal. Received with nothing less than a roar from the Tory benches (as if they, like so many others, knew that this badly kept secret was coming), Hammond today announced that stamp duty for first-time buyers would be scrapped for properties sold for up to £300,000.

Normal rates of stamp duty will apply for anything above the £300,000 threshold.

It is set to cost the Government £3.1bn, according to some calculations, with each first-time buyer set to benefit to the tune of around £1,660 on the average £208,000 cost of a first home, the Government claims.

But few believe this is the panacea required to get the UK’s property market back on track to real-life affordability. Indeed, some predict this could simply mean sellers increase their prices by the same amount.

Elsewhere, the Help to Buy scheme will receive another £10bn, set to assist in the funding of around 135,000 more homes for new owners.

And while the Chancellor announced punitive powers for local authorities to tackle empty property with a 100 per cent council tax premium and plans for a 300,000 new home boost to the UK’s housing stock every year by the middle of 2020, we’re still some way short of the million homes some experts suggest we would need to build every year to eventually have an effect on the skewed supply and demand problem.

“The Chancellor is tackling only part of the problem – the shortage of new homes, rather than the shortage of homes for sale,” says Jonathan Hopper, managing director of Garrington Property Finders.

“Britain clearly needs to build many more homes to keep up with future demand. But the Chancellor’s excessive focus on this small part of the housing shortage misses the bigger, and more immediate, picture.

“Even if his plans do unleash a wave of new homebuilding, it’ll take years for the property market to see any significant benefit. The Chancellor is solving the problem of tomorrow but doing little to solve the problem of today – the abject lack of a fully functioning property market.

“The combination of high rates of Stamp Duty and falling real wages mean affordability is becoming a barrier for ever more would-be buyers.

“There’s no point opening the floodgates at the bottom of the market if the higher levels remain dammed up by punitive levels of Stamp Duty and a broken demand and supply dynamic.”

Just about managing

The consensus is that there has been more effective news for those battling to keep the bills under control on a day-to-day basis – the just about managing or JAM demographic that was at the centre of financial oriented campaigning at the last general election.

For those aged 25 and over, the national living wage is set to rise to £7.83 an hour – a pay rise of around £600 a year for a full time worker, the Chancellor calculates.

Martin Upton, from the Open University, says: “It’s great to see the Budget helping those who are already financially squeezed and for many, living on the breadline. Cutting the universal credit waiting times could mean the difference between sinking or swimming for many people.

“Following the OBR’s gloomy growth forecast, it seems to have dented the Chancellor’s room for giveaways by billions. But it is clear to see that what help there is, is being focused towards those on low incomes. With the national living wage set to rise by 4.4 per cent and income tax personal allowance up to £11,850 at last we are helping those that really need it.”

Initial calculations suggest the income tax threshold shift could save lower rate taxpayers around £100 a year from next April taking national insurance changes into account. Higher-rate earners could save around £200.

Pensioners

While this was a Budget designed to woo younger voters albeit with limited means, the quiet should be welcomed by older generations suggests Kate Smith, head of pensions at Aegon.

“As expected, today’s Budget confirmed that the state pension will increase by 3 per cent next April from £ 159.55 to at least £164.37 giving pensioners an annual rise of £250. However, those who reached state pension age before 6 April 2015 and are on the old basic state pension will only see their state pension increase from £122.30 to £125.97 a week, giving an annual increase of only £191.

“Fortunately there was no U-turn in the lifetime allowance increase, which has been confirmed to increase to £1,030,000 from next April. Following a series of reductions, this is good news for savers, even if on the surface the increase isn’t large. A small increase is welcome for those nearing the limit, but this is a complex area and people seek financial advice to avoid paying unnecessary tax.”

“No news is good news for pension investors,” agrees Tom McPhail, head of policy at Hargreaves Lansdown.

“The stability of no change is a welcome relief after years of political interference and the salami-slicing of reliefs and allowances. There may have to be further changes at some point in the future; higher rate relief in particular is still likely to be scrapped as soon as a government feels it is strong enough to do it; in the meantime investors can make hay while the sun shines.”

Savers

“There is an important role for employers to play here through workplace savings, so it’s disappointing that the Chancellor hasn’t made it easier to contribute to workplace Lisas,” says John Wilson, head of technical at JLT Employee Benefits.

“By making pensions and Lisas (or ISAs) work in tandem as a workplace savings platform, it is possible to develop an incentive scheme more compelling than pension or Lisa saving alone.

“From saving for a deposit towards a first house purchase to bringing up a family, paying off debt, and saving for retirement, greater choice in workplace saving gives employees more scope to tailor their saving and spending to different stages of their life.”

Travellers

Britons on the move will also gain from tinkering and the lack of it by the Chancellor today. In another bid to win back younger voters, the young person’s railcard will be extended to offer a third off train travel for those up to 30 years old. Around 4.5 million younger adults could benefit from the wider eligibility, Hammond claims.

Elsewhere, fuel duty rises have been ruled out for the eighth year in a row. But diesel car drivers be warned – if your car doesn’t meet the latest standards on emissions, the first year VED rate will go up by one band.

And for those motorists already environmentally minded, the number of electric-car charging points is set to rise thanks to a £400m fund injection.

“While this is fantastic news for motorists, the total investment the Government has allocated to encourage the use of electric vehicles is disproportionate to the opportunity for change,” warns Alex Buttle, director of car-buying comparison website Motorway.co.uk.

“More electric charge points are key, but the Government also needs to put far more resource into encouraging car-owners to switch to alternative fuel vehicles in the first place.

“Electric cars are still far too expensive for the average car owner, and while alternative fuel car sales are on the up, they’re not rising fast enough to phase out fossil fuel cars within the next five to 10 years.

“The Government needs to be far more aggressive with supportive tax breaks and incentives to help consumers make the leap to the more expensive electric car models. It needs to be a no-brainer for motorists to take the leap, and we’re just not there yet.”

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