How the Autumn Statement affects you

Household finances3

Philip Hammond’s 2016 Autumn Statement contained a number of announcements that will affect families and homeowners across the country.

Posted: 23rd November 2016 

In the wake of the Brexit vote that saw David Cameron replaced by Theresa May as prime minister and Mr Hammond take over from George Osborne, a number of economic targets were scrapped in order to give the new chancellor greater scope to tackle the challenges facing the country.

In his first major fiscal announcement since becoming chancellor, Mr Hammond has delivered what he says is a “balanced and prudent” set of measures that will help to stimulate the economy while giving back to homeowners and other members of the public.

The chancellor stated that the government has three main targets for the coming years – the first being to get the budget in surplus by the next parliament, the second to reduce net debt by the end of this parliament, and the third to limit welfare spending.

However, a number of specific announcements have been made that will directly affect households across the UK. We explain when these changes are set to take effect, and what they could mean for both you and your family in 2017 and beyond.

A housing market that works for everyone

Despite the number of new homes being built increasing by 11 per cent in a year, the chancellor set out a plan to ensure that even more people are able to achieve their goal of homeownership and further increase the number of couples and families who are able to purchase their own home in an area they desire.

One of the key policies is to ensure that infrastructure spending occurs in areas where housebuilding is also taking place to bring the two in line. As well as major road schemes in every region, which will help to boost the country’s transport network, a focus will also be placed on boosting productivity by connecting residential areas to business hubs.

Overall, £2.3 billion in funding will be set aside to help build up to 100,000 new houses in high demand areas, with a further £1.4 billion to deliver an extra 40,000 homes.

The Help to Buy scheme, which has so far helped thousands of families across the UK to get on the housing ladder, will also continue in the form of the Help to Buy equity loan scheme and the Help to Buy ISA, which each provide financial support to those aiming to buy their first home.

The government is aiming to double capital spending on housing and also help to address some of the long-term challenges associated with supply, which will also be addressed by the communities secretary in an upcoming white paper.

Digital infrastructure

In addition to the nation’s physical infrastructure, significant investment is also set to be allocated to digital spending, with a major emphasis on the next generation of internet.

Mr Hammond said that he wants the UK to be a world leader in 5G, and so widespread spending and trials will be undertaken to help boost mobile speeds across the nation, providing both business and the public with improved connectivity.

As well as creating new opportunities for entertainment and the delivery of commercial services through 5G, the £1 billion funding in digital infrastructure will also extend to the delivery of fibre broadband to homes and business across the UK.

Taxes and wages

As part of an overall effort to make the tax system fair, the chancellor said he will aim to reward those who work more and also clamp down on those who use tax avoidance schemes.

The personal allowance will also rise to £11,500 in April and Mr Hammond reaffirmed the government’s commitment – set out by the previous chancellor - to take the allowance up to £12,500 by the end of the current parliament.

The 40p threshold is also set to rise to £50,000 over the same period, which the chancellor says will mean that both low and middle earners will see an increase in their disposable income.

From April 2017, the chancellor said that both employers and employees who use benefits in kind schemes will pay the same tax as everyone else, with some exceptions, including childcare and cycle to work schemes.

A further announcement was made with regard to the National Living Wage, which will rise from £7.20 to £7.50 in April, while funding is also set to be unlocked for new grammar schools.

Family finances

A new savers’ bond has been proposed to help people with the ambition of long-term savings, which includes those saving for house purchases, and will sit alongside other measures such as the Help to Buy Scheme.

The chancellor also announced there will be an increase in insurance premium tax, which will rise from 10 per cent to 12 per cent over the period, although this is set to be offset by tighter rules around whiplash claims for car accidents, which will see the average car insurance policy fall by around £40 a year.

In further good news for motorists, the proposed fuel duty rise has been scrapped for the seventh successive year, which is expected to save the average driver around £130 a year, and the average van driver £350 a year.

Finally, the chancellor made the surprising announcement that the 2016 Autumn Statement will be the last one of its kind, with next year seeing the introduction of an autumn Budget, which will replace the spring Budget and take place well in advance of the new financial year, ensuring that households and businesses are subject to far fewer fiscal changes every year.

By giving families and organisations advanced notice of changes that will affect their finances, the government says it will mean that the country and those who live in it are better placed to make long-term plans to achieve their aims.

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