Chancellor of the Exchequer Philip Hammond has revealed the UK Budget for 2017, with announcements around Brexit funding, electric cars, tax relief and an NHS cash injection.
There was immediate excitement around a stamp duty cut for all first-time home buyers up to £300,000 – but not everyone will be celebrating the Budget.
Many insurers will undoubtedly have been left disappointed by the speech after Hammond remained silent on the issue of the Insurance Premium Tax (IPT), which the British Insurance Brokers’ Association (BIBA) has described as a “regressive tax.”
BIBA has called for a reduction in the standard IPT rate. The group’s chief executive Steve White said: “IPT is a tax on protection and the UK has one of the highest levels of premium tax in Europe, yet our insurance sector also has one of the biggest costs of regulation. We believe that IPT is now at a level that is contrary to HMT’s policy that it should make the required contribution to Government revenues while minimising the effect on the take-up of insurance.”
But perhaps in the case of the Budget 2017, no news on the IPT is good news.
Amanda Blanc, CEO, UK and Ireland,
AXA, commented: “We are pleased that the Chancellor has not increased insurance premium tax (IPT) as speculation had been rife that this was on the cards. After the IPT hikes in the last two years, another increase would have been a harsh blow for consumers. The decision not to do so feels like a victory for people and families who want to get on, safe in the knowledge that their home, health and businesses are protected.”
Elsewhere in the budget:
Hammond pledges extra £3 billion for Brexit preparations
The chancellor said the UK economy is “set on a path to building a new relationship with our European neighbours and a new future outside the European Union.” He said the future is ripe with “change, challenges and new opportunities.”
With Brexit negotiations at a critical phase, Hammond is setting aside a further £3 billion for Brexit preparations over the next two years, on top of the £700 million already invested in the negotiations.
Electric cars get boost
The chancellor said: “Our future vehicles will be driverless – but they will be electric first.”
Therefore, the government will provide extra funds and tax incentives for electric car drivers. It will invest £400 million into a new charging infrastructure fund, an extra £100 million for a Plug-In-Car Grant, and £40 million into research and development in this area.
He joked: “I know Jeremy Clarkson doesn’t like them, but there are many other good reasons to pursue this technology so today we step up our support for it. Sorry Jeremy, not the first time you’ve been snubbed by Hammond and May.”
Tax relief for North Sea oil companies
Hammond confirmed there will be a tax break for transfers of North Sea oil and gas fields. He said this will “encourage new entrants to bring fresh investment to a basin that still holds up to 20 billion barrels of oil.”
Gordon Browne, head of energy and construction at
AIG Europe, commented: “North Sea decommissioning is a major industrial challenge for the UK and one that will last for decades. There are two major challenges. The first is that we need to keep North Sea oil and gas fields productive for longer and that is being hampered by a multitude of issues, one of which surrounds decommissioning tax relief. New operators with the skills and commitment to keep our energy resources flowing are being discouraged from entering the market and the industry needs to find solutions to resolve this.
“The second is that when decommissioning needs to happen, it needs to be done in a way that ensures cost certainty while ensuring present and future liabilities are well defined, managed and protected. There are a number of financial solutions that can help encourage a commercial environment that continues to attract investment - the insurance industry encourages the relevant stakeholders to explore them all.”
Offshore crackdown
Offshore tax avoidance has been a hot topic since the Paradise Papers leak earlier this month.
The Chancellor wants to send a “signal of determination” to the world by revealing that HMRC will raise tax on royalties relating to UK sales when those royalties are paid to a low tax jurisdiction, raising about £200 million a year.
Other highlights included:
The Government will try to fix the Universal Credit problem by removing the seven-day waiting period, extending the repayment period for advances and allowing claimants to continue receiving their housing benefits for the first two weeks to help with rent payments.
Hammond will give an extra £2.8 billion to the NHS in England, which he admits is “under pressure right now.” This is in addition to new funds announced previously, meaning a £7.5 billion increase in the NHS budget.
The small business VAT threshold will be kept at £85,000 because many are “feeling under pressure right now.”
Stamp duty will be abolished for all first-time-buyers up to £300,000. This will also apply for the first £300,000 of properties up to £500,000.
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BIBA reiterates stand on Insurance Premium Tax
Public sector forced to reduce cover because of Insurance Premium Tax
