Why this Budget is a precursor to big changes to come

Lee Clark

As the chancellor stepped to his feet and rested himself onto the dispatch box to deliver the Autumn Budget, the anticipation of what he planned to deliver was buzzing in all of our minds.

Would he take the knife further to public services, change pension rules once again or would he shed the image of "Spreadsheet Phil" and deliver a politically motivated budget?

Of course all Budgets are political, as the late great American Politician, Mario Cuomo, famously uttered: "You campaign in poetry and govern in prose".

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Therefore, today's (22 November) Budget would have been poetry to many younger members of our society, those burdened with high levels of student debt, little chance of owning their own home and maybe just maybe the changes introduced today will bring the dream of home ownership a little closer. 

The big news of the day was surely the changes to stamp duty and enterprise investment schemes (EIS), although the devil will be in the detail and it will be interesting to track the influence of the changes in stamp duty on the housing market.

Mr Hammond announced stamp duty would not be paid on first-time buyer purchases up to £300,000.

He said the move would cut stamp duty for 95 per cent of first-time buyers and abolish it altogether for 80 per cent of first-time buyers.

To help first time buyers in very high price areas such as London, stamp duty will be scrapped on the first £300,000 of the purchase price of properties up to £500,000 - an effective reduction of £5,000.

EIS will still continue to be an area of higher risk investing and it seems at first glance that these changes are targeted at investors who use EIS to shelter their capital gains with the additional potential benefit of inheritance tax benefits. We will have to wait and see the detail.

This Budget was notable for what was not included: no changes to capital gains, income tax rates, dividends, national insurance or pensions.

We heard much from the chancellor over the need to be ready for Brexit and I just wonder if the Budget of 2018 will bring about a complete fiscal reset and an overhaul of the tax system in the UK ready for the time when the UK leaves the European Union. 

So in my humble opinion this Budget is a precursor to bigger changes to come....

Lee Clark is divisional director of financial planning at Brewin Dolphin