But that quirk aside, it’s unlikely to be one for the history books.
Constrained by an increasingly fragile economy, Mr Hammond’s scope for tax giveaways was always going to be limited.
In the event, his Budget speech was studded with investment announcements in infrastructure, education and the NHS, and quickly put paid to any hopes of big tax cuts.
CORPORATE TAX
Instead, there were a series of tax rises for business – albeit ones whose impact won’t be felt immediately.
The Chancellor may have left Britain’s totemic headline rate of Corporation Tax unchanged, but he also unveiled a slow-motion double-whammy that will hit many businesses hard.
The changes to the way Business Rates are increased are a classic sucker punch. Initially, businesses will see their rates rise more slowly, but before long they’ll be paying more as revaluations will happen every three years rather than every five.
Likewise, the changes to the way Corporation Tax is charged on capital gains will prove a long-term cash cow for the Treasury. From January, businesses will no longer be able to deduct the influence of inflation from their capital gains, driving up their Corporation Tax liability and hitting property companies especially hard.
The move to make online marketplaces jointly liable for VAT with sellers sounds like a good way to clamp down on VAT evasion, but it’s likely to be challenged hard by the big beasts of the e-commerce world. In the short-term, the biggest winners from this plan will be eBay and Amazon’s lawyers rather than the Treasury.
Ironically, the biggest tax grab of all didn’t even get a mention in the Chancellor’s speech – it was a consultation buried on the Treasury’s website. The plan to level the Capital Gains Tax playing field for foreign owners of UK property could net the government hundreds of millions in extra tax.
At present, foreign investors in British commercial property are exempt from CGT, so the plan to end this exemption has the rare distinction of being a huge money-spinner for the government but which won’t hurt UK voters. From the Chancellor’s point of view, this makes it a near-perfect policy.
PERSONAL AND PROPERTY TAX
Modest increases to the tax-free personal allowance (which will rise to £11,850 from next April) and the higher-rate tax threshold (which is rising to £46,350) were in line with inflation and have understandably failed to garner headlines.
By contrast the Chancellor’s abolition of Stamp Duty for people buying their first home – up to the value of £300,000 – was a Budget box office smash.
Delivered at the end of his hour-long speech, the Stamp Duty giveaway has been cast as the rabbit traditionally produced from the Chancellor’s hat on Budget Day.
There was also a raft of measures designed to encourage housebuilders, including a £44bn programme of capital funding and loan guarantees.
But while the stimulus for builders and cut in Stamp Duty had been widely trailed, perhaps the greatest surprise on the property front was what didn’t happen; for once buy-to-let investors were spared their customary role of Budget Day whipping boys.
After years of being portrayed as the villains of the property market, they escaped further unwanted attention from a Chancellor who instead chose to focus on the housing market’s fundamentals rather than seeking scapegoats.
Such a huge stimulus for the property market – both the immediate cut in Stamp Duty and the long-term largesse for housebuilders – should inject some life into a market that has been weighed down by weakening sentiment and falling real wages.
Meanwhile the move to give councils the power to levy a 100% Council Tax surcharge on empty properties risks being a triumph of symbolism over substance.
For wealthy buyers who snap up UK property to hold as a rapidly appreciating investment, the measure is likely to be an annoyance that will come off the bottom line rather than persuade them to let properties they see as an asset rather than a home.
However, there was one shot across the bows for overseas investors. The Capital Gains Tax avoidance technique of using a company that holds UK property instead of selling the property itself looks set to be shut down from April 2019, with UK advisers being asked to help police the new regime.
ECONOMIC OUTLOOK
With the economic outlook darkening – and despite the Chancellor’s efforts to talk up the OBR’s downward revisions for growth, business investment and productivity – Mr Hammond was acutely aware that he must do nothing to curtail already fragile consumer spending or foreign investment.
Yet at the same time he needed to find a way to bolster the Government’s finances, which are coming under growing strain from the end of the public sector pay cap.
The net result was a ‘safety first’ Budget which sought to heal what the Prime Minister describes as Britain’s ‘broken housing market’ without knocking the fragile economy off track. For once the tax bill will fall largely not on individuals but on companies – even if many of them won’t notice the extra cost immediately.
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E advice@hwfisher.co.uk
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