Chancellor Philip Hammond pulled a million people out of the higher rate taxpayer bracket in a Budget he claimed was for hard working families of grafters and carers.
In his third Budget - and what should be the last one before Britain leaves the European Union in March next year – he claimed he would open a new chapter in this country’s economic history.
Kicking off his Budget, which came as prime minister Theresa May struggled to finalise a deal with the European Union, Mr Hammond admitted he was holding fiscal headroom in case there was a no-deal Brexit.
But he said if Mrs May failed to strike a deal with Brexit, despite his claims the country was well funded for leaving the European Union the March fiscal statement could have to be upgraded to a Budget.
After joking he avoided Halloween or a December Budget to miss out on headlines about ‘Hammo House of Horrors’ or ‘Spreadsheet Phil turns Santa Claus’, Mr Hammond scattered cash about in a bid to boost the financial prospects of the country as it heads towards Brexit.
Here are the key details of this year’s Budget that you need to know for your clients:
1) Housing tax boosts
The sale of the family home is usually exempt from Capital Gains Tax.
But the Budget reduced the period that continues to qualify for relief once the owner has moved out from 18 to nine months.
Caroline Le Jeune, partner at tax firm Blick Rothenberg, said: "This has the potential to bring genuine sales of family homes at least partly within the scope of tax."
From April 2020 the government will reform lettings relief so it only applies in circumstances where the owner of the property is in shared occupancy with the tenant.
In a boost for first-time buyers Mr Hammond said he would extend the stamp duty exemption to shared ownership properties worth up to £500,000.
A further £500m was also pledged for the Housing Infrastructure fund, to assist with the building of 650,000 homes.
Mr Hammond also announced plans to reduce planning restrictions that make it hard for shops to be converted into homes.
Plans to rejuvenate the nation's boarded up high streets were also presented as a way to boost the housing stock.
The chancellor promises to help small shops by cutting business rates by a third for all retailers in England with a rateable value of £51,000 or less.
According to Mr Hammond, that will mean an annual saving of "up to £8,000 for up to 90 per cent of all independent shops, pubs, restaurants and cafes".
Mr Hammond announced £675m of co-funding to create a fund to help councils draw up plans for the transformation of high streets and he promised to allow them to invest in the improvements they need to redevelop under-used retail and commercial areas into residential property.
2) Wages and personal tax
From April 2019 the National Living Wage will increase from £7.83 an hour to £8.21.
According to Mr Hammond this will benefit around 2.4 million workers, and is a £690 annual pay rise for a full-time worker.
The personal allowance – the amount you earn before you have to start paying income tax– will increase by a further £650 in April 2019 to £12,500.
This increase comes a year earlier than planned, and will be maintained in 2020.
According to Mr Hammond, this means a basic rate taxpayer will pay £1,205 less tax in 2019 to 2020 than in 2010 to 2011.
The higher rate threshold will increase from £46,350 to £50,000 in April 2019.
The amount people will have to earn before they pay tax at 40 per cent will increase from £46,350 to £50,000 in April 2019.
This means that in 2019 to 2020, there will be nearly one million fewer higher rate taxpayers than in 2015 to 2016.
3) Tinkering with investments
The annual investment allowance will increase to £1m from 1 January 2019 to 31 December 2020.
The government will increase the annual investment allowance five-fold from £200,000 to £1m to help businesses to invest and grow.
Also, from October 2018, businesses will be able to deduct 2 per cent of the cost of any new non-residential structures and buildings off their profits before they pay tax.
"Faang" funds - those investing in the internet giants of Facebook, Apple, Amazon, Netflix and Google - may also take a hit in the Budget.
From April 2020, large social media platforms, search engines and online marketplaces will pay a 2 per cent tax on the revenues they earn which are linked to UK users.
While the adult Isa annual subscription limit for 2019 to 2020 will remain unchanged at £20,000 the annual subscription limit for Junior Isas and child trusts funds for 2019 to 2020 will be uprated in line with CPI to £4,368.
NS&I announced several future enhancements to Premium Bonds, which will encourage a stronger savings habit and boost the opportunity for young people to save.
The minimum investment for Premium Bonds will be reduced from £100 to £25
People other than parents and grandparents will be able to purchase Premium Bonds for children under 16 and NS&I will launch a new app to make saving easier.
The government also revealed plans to reform the structure of enterprise investment scheme funds from 2020.
The aim of the reforms is to target the scheme on "knowledge-intensive" investments after a consultation earlier this year.
From April 2020 the government will reform the HM Revenue & Customs approved fund structure, which will mean at least 80 per cent of funds raised must be invested in knowledge-intensive companies.
4) Growth forecasts
Mr Hammond said growth going forward would be "resilient" improving next year from the 1.3 per cent forecast in March to 1.6 per cent.
In 2020, he expected 1.4 per cent, 1.5 per cent in 2021 and 2022 and 1.6 per cent in 2023.
He said with regular pay growth at 3.1 per cent, its strongest in almost a decade and inflation forecast to average 2 per cent next year, the Office for Budget Responsibility forecast sustained real wage growth in each of the next five years.
Government borrowing this year will be £11.6bn less than forecast at the Spring Statement and fall from £31.8bn in 2019 to 2020 to £26.7bn in 2020 to 2021, £23.8bn in 2021 to 2022, £20.8bn in 2022 to 2023 and £19.8bn in 2023 to 2024.
Mr Hammond said national debt peaked in 2016 to 2017 at 85.2 per cent of GDP and then falls in every year of the forecast from 83.7 per cent this year to 74.1 per cent in 2023 to 2024.
Mr Hammond said the government plans to abolish the use of the private finance initiative (PFI) for future projects but will honour existing contracts.
5) Pensions and self-employed
Self-employed workers will see their tax bills increase from 2020 onwards as the government has expanded the off-payroll working rules, known as IR35, to the private sector.
The move will force contractors such as IT and management consultants who work through their own company but are in practice employed by a third party, pay the right tax as employees.
The government also unveiled responses to their proposals for a pension cold-calling ban.
Ahead of Mr Hammond's Budget speech, the chancellor announced an increase in spending on mental health services in England by at least £2bn a year, a £30bn package for England's roads, including repairs to motorways and potholes and £900m in business rates relief for small businesses and £650m to rejuvenate high streets.
emma.hughes@ft.com
