Updated Cookies Policy - you'll see this message only once.

Barclays uses cookies on this website. They help us to know a little bit about you and how you use our website, which improves the browsing experience and marketing - both for you and for others. They are stored locally on your computer or mobile device. To accept cookies continue browsing as normal. Or go to the cookie policy for more information and preferences. If you clear your browser history to disable or delete all cookies, your cookie preferences will automatically be reset to accept all cookies. Please go to the cookies policy to make any changes.

The Autumn Budget 2017

November 2017

Chancellor Philip Hammond has delivered an Autumn Budget^ that attempts to toe a careful line between ‘boring’ and ‘bold’.

Businesses will welcome measures on productivity, infrastructure, skills and taxation, but beyond this Hammond’s more substantive measures focused on housing and more funding for the NHS.

Headline figures

The Chancellor described the Office of Budget Responsibility’s (OBR) forecasts as the bit with the “long, economicky words”, but humour could not disguise the headline announcement on the downgrading of growth forecasts to below 2% every year – this in part will mean an additional £53bn in borrowing over the next five years. However, debt as a share of GDP is now set to start falling and is forecast to fall to 79.1% of GDP by 2021/22. £3 billion has been set aside for Brexit, and Hammond is ready to allocate further funds if needed.

OBR and Barclays GDP forecasts

2016 2017 2018 2019
ONS OBR Barclays OBR Barclays OBR Barclays
1.8% 1.5% 1.5% 1.4% 1.3% 1.3% 1.3%

Corporation tax rate

The previous and planned changes to the Corporation Tax main rate (for all profits except ring fence profits) is shown below. In the Budget, the Government made no change to its planned decreases on the main rate.

2016 2017 2018 2019 2020
20% 19% 19% 19% 17%

National Living Wage and minimum wage

The National Living Wage applies to all those over 25, while the minimum wage applies for workers aged 24 and under. From April 2018, the National Living Wage will increase by 4.4% from £7.50 to £7.83.

From April 2018

‘Real’ Living Wage National Living Wage National Minimum Wages
18 and over 25 and over 21 to 24
18 to 20
Under 18 Apprentice
£8.75 / £10.20 in London £7.83 £7.38 £5.90 £4.20 £3.70


‘Real’ Living Wage National Living Wage National Minimum Wages
18 and over 25 and over 21 to 24
18 to 20
Under 18 Apprentice
£8.75 / £10.20 in London £7.50 £7.05 £5.60 £4.05 £3.50

(Source: HM Treasury, Living Wage Foundation)

Business rates and taxes

Businesses will welcome the announcement that the revaluation of business rates will take place every 3 years instead of every 5 after the 2015 revaluation was delayed, which would have left some businesses vulnerable to significant property value increases. A more frequent revaluation is hoped to result in less extreme changes.

With regards to taxation, the Chancellor announced measures that will bring both pleasure and pain. For small businesses, the decision to maintain the VAT registration threshold at £85,000 for the next two years will be welcomed. Similarly, individual income tax payers will be pleased to see an increase to the basic rate of income tax to £11,850 from £11,000, which marks a slight raise on the planned increase to £11,500. The higher rate threshold will also be increased to £46,350, with both of these in line with inflation.

However, for some businesses Hammond’s changes to the indexation allowance will come at great cost. While the Chancellor did not alter the main rate of corporation tax, which is still intended to decrease to 17% by 2020, he did announce a freeze on the corporate indexation allowance from 1 January 2018.

Although seemingly unassuming, this measure is a significant change for UK business. It means that, upon the sale of an asset, companies will no longer be able to deduct that asset’s inflationary growth, gained over the period the asset was held, from their overall capital gains tax bill for that asset.

How the indexation allowance works

If Philip Hammond Ltd bought a new Red Box in 2001 for £12,000 and sold it today, then the company would be entitled to deduct £6,108 - i.e. the Red Box’s inflationary gains between 2001-17 from their overall capital gains tax bill for the sale of that Box.

Following today’s announcement, if Philip Hammond Ltd were to complete the same sale in January 2018, then they would not be entitled to this deduction, meaning their final capital gains tax bill for the Red Box would be higher. This effective abolition of the indexation allowance brings the policy in line with that of other major economies.

The Government is also extending its crackdown on tax avoidance to the digital economy, with measures announced that will apply income tax to royalties relating to UK sales from multinational digital businesses from April 2019, even when they are paid to a low-tax jurisdiction and as such, would not normally be taxed in the UK under current rules. According to the Chancellor, this will raise £200 million a year, and will send a signal of the Government’s determination to the crackdown of this type of avoidance.

Innovation and productivity

The Budget had a strong focus on increasing productivity and investing in the industries of the future, a personal passion of the Chancellor’s and a focus of this Government as the UK prepares to leave the EU in 2019.

£2.3 billion will go to research and development, which includes £500 million for artificial intelligence and 5G initiatives, and £400m for an electric vehicles charging infrastructure fund. Hammond also announced that electricity used to charge vehicles at work will not be subject to taxes.

While only affecting a very small proportion of people at the moment, this is indication of the Government’s keenness to boost these new technologies by removing barriers to use.

Alongside these measures, the National Productivity Investment Fund – Hammond’s flagship policy from his fiscal statement this time a year ago - will be extended to 2022/23 and expanded to be worth more than £31 billion.

Productivity – output per worker (2015 index base)

Graph showing - Productivity – output per worker. Index 2015 = 100

(Source: ONS)


With the Government’s focus on winning back younger voters, Hammond’s other key area of focus in the Budget was housing. The flagship announcement was on stamp duty, which has been abolished for first-time buyers for homes worth up to £300,000 and for people buying a home worth up to £500,000, the first £300,000 will be exempt. Hammond is also setting aside a total of £44 billion to support the housing market, including support for SME housebuilders.