Budget 2018 - “Austerity is coming to an end” with “a crowd-pleaser of a budget” ?

5th November 2018

In 72 minutes, Philip Hammond delivered his third Budget as Chancellor with the promise of an end to austerity and “something for everyone”. The headline measure was undoubtedly what Hammond called the “tax cut for 32 million people”  with the increase to the personal allowance and the higher-rate threshold from April 2019, in line with last year's Conservative manifesto pledge, but delivered a year early. There were also signs of addressing controversial issues such as extending the IR35 laws into the private sector, tightening up entrepreneurs and lettings reliefs and introducing a UK digital services tax of 2pc on the revenues of search engines, social media platforms and online marketplaces.

By way of summary, some of the key points were as follows:

Personal taxation and wages

The personal allowance threshold, the rate at which people start paying income tax at 20%, to rise from £11,850 to £12,500 in April - a year earlier than planned

·        The higher rate income tax threshold, the point at which people start paying tax at 40%, to rise from £46,350 to £50,000 in April

·        The lifetime allowance for pension savings increases for 2019/20 from £1.030 million to £1.055m.

Stamp duty and housing

·        All first-time buyers purchasing shared equity properties valued up to £500,000 will be exempt from stamp duty. This is an extension from the previous level of up to £300,000 and the relief is retrospective, meaning first-time buyers since the last budget will also gain.

Business and digital

·        Business rates are to be cut by one third for the next two years from next April for all retailers in England with a rateable value of £51,000 or less. The government said this would deliver an annual saving of up to £8,000 for up to 90 per cent for all independent shops, pubs and restaurants.

·        New 2% digital services tax on UK revenues of big technology companies, from April 2020

·        Extending changes to the way self-employment status is taxed, from the public sector to medium and large private companies, from 2020

·        The annual investment allowance will be temporarily increased from £200,000 to £1m for a two-year period from 1 January 2019.

·        From 6 April 2020, non-UK resident companies that carry on a UK property business, or have other UK property income, will be charged to corporation tax rather than being charged to income tax.

These are just a selection of measures which we believe may be of interest to our clients and contacts. For further details on these key points and others, read the Whittles newsletter here or go to the relevant sections in the website’s latest industry news here.

If you would like to discuss how this Budget affects you or your business, please get in touch.