Today the Chancellor Philip Hammond has delivered his third Budget and the one that is seen as the largest giveaway Budget since 2010. The Chancellor has declared this Budget as “Budget for Britain’s future” aimed for hard working families.
While a range of revenue-raising measures were announced such as new “digital service tax” and new tax on plastics, a number of well received Government’s commitments were made/re-affirmed including an increase in personal tax allowance and the higher rate threshold a year earlier than planned, slashing of small business rates by a third, freezing fuel and alcohol duty, increasing stamp duty exemption threshold for first time-buyers as well as extra funding for NHS, defence and universal credit.
Below we have summarised the key points from today’s Budget announcement:
Taxation
- National Living Wage will increase from £7.83 an hour to £8.21 in April 2019;
- Tax-free Personal Allowance will rise from £11,850 to £12,500 and the Higher Rate Threshold will increase from £46,350 to £50,000 from April 2019, a year earlier than planned;
- First-time buyers will enjoy up to £500,000 stamp duty exemption when purchasing shared equity homes;
- Changes are proposed to Private Residence Relief (PRR) from Capital Gains Tax to reduce the last months of ownership which always deemed a period of qualifying occupation for PRR from 18 months to 9 months;
- From 6 April 2020, £40,000 Lettings Relief will only apply in situations where the owner of the property is in shared occupancy with the tenant;
- The Annual Investment Allowance will increase from £200,000 to £1 million from 1 January 2019 to 31 December 2020;
- 2% tax on revenue from Digital Services is introduced for large technology businesses;
- New tax is announced on manufacture and import of plastics containing less than 30% of recycled material, effective from April 2022;
- Entrepreneurs Relief qualifying criteria changed immediately with an extension of the qualifying period to 24 months for disposals after April 2019;
- IR35 rules extended to the Private Sector for large and medium sized businesses from April 2020;
- Repayable R&D tax credits restriction proposed – limited to three times PAYE and NICs from April 2020;
- Duty on beer, cider and spirits remains frozen, however, cost of a bottle of wine duty will rise by 8p, in line with inflation, in February 2019;
- Tobacco duty will continue to rise by inflation plus 2%;
- Fuel duty to be frozen for ninth year in a row;
- Small retail businesses will see their business rates bills cut by a third for two years from April 2019;
- Public lavatories will receive 100% business rates relief;
- From April, large businesses will be able to invest up to 25% of their apprenticeship levy to support apprentices in their supply chain;
- Some employers will pay half of what they currently pay for apprenticeship training – from 10% to 5%. The government will pay the remaining 95%.
Public spending
- Spending on public services will grow 1.2% above inflation a year from next year until 2023-24;
- £650 million for social care in 2019;
- £1.7 billion to increase existing work allowances in Universal Credit;
- £400 million extra for schools in 2018;
- £30 billion to improve roads;
- NHS funding will increase, including more spending for mental health;
- Lifting the borrowing cap to allow local authorities to build more housing;
- Local high streets will benefit from £675 million to improve transport links, re-develop empty shops as homes and offices and restore and re-use old and historic properties;
- A new railcard offering up to a 1/3 off most rail travel for all young people aged 26 to 30, available nationally by the end of 2018;
- £1 billion more for defence over the next two years;
- £500 million of additional funding for departments to prepare for Brexit for 2019-20, on top of the £1.5 billion already announced for that year.
The full Chancellor’s speech can be found here
The Budget 2018 Policy paper can be found here
If any of the new announcements affect you or your business and you would like to discuss it further with one of our specialists, you can contact AVEY of London on:
Tel: 01707 691 783
Email: info@aveyoflondon.co.uk
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