Taking a look at taxation and household budgets

The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy or position of the University of Birmingham

“The Chancellor froze VAT thresholds for small businesses starting to have to charge VAT to their customers. This matters to the same people as this will mean more businesses having to charge people VAT than would have been the case before - the same people who will receive this 4.4% increase may find they get hit with a 20% extra cost on the services and goods they buy from smaller traders.”  

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The second Budget of 2017 offered a range of small giveaways to various groups but no big splash news for the many on the lowest incomes and those just about managing that many had called for.

There was confirmation of an increase in the National Minimum Wage to £7.83 from April next year (from the current £7.50 per hour) which, the Chancellor claims, will leave £600 a year in the pockets of those 2 million people currently on this very low level of income. This is clearly a welcome 4.4% increase. However, at the same time he froze VAT thresholds for small businesses starting to have to charge VAT to their customers. This matters to the same people as this will mean more businesses having to charge people VAT than would have been the case before - the same people who will receive this 4.4% increase may find they get hit with a 20% extra cost on the services and goods they buy from smaller traders.

The key area of focus of the Chancellor’s speech however, was on housing with various announcements attempting to address the housing shortage now widely acknowledged as one of the most significant issues the UK faces. This included £44billion for housebuilding - but only part of this in cash and it was not clear how much of this will support the most in need; for social renters rather than so called ‘affordable’ housing which remains the mantra of the Conservative party as if that is the only sensible approach to addressing housing needs for all. He also abolished stamp duty for first time buyers buying homes up to £300,000, with immediate effect. But again, this only benefits those in a position to be able to put down the large sums needed to buy their own home. The details in the full Budget documents might reveal more for the social rent sector than the speech gave away, but this balance continues to be too skewed towards home ownership in my opinion.

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