Continuing our commitment to keep you informed about government decisions which influence your finances, here is our summary of the Budget announced on 29 October.
The Prime Minister has announced the end of austerity but Chancellor Philip Hammond wants to keep a tight rein on the country’s finances, especially with the unknown consequences of Brexit.
Mr. Hammond has allowed local authorities to build more housing and public debt has been lifted slightly to keep fuel prices under control. So this could be viewed as an interim Budget until Brexit plans and the financial aftermath become much clearer.
Autumn Budget 2018 Announcements
There will be a full public spending review between April and June 2019, subject to Brexit. This will decide how much police, local government, schools, defence and other public services will receive.
The Resolution Foundation, a not-for-profit research and policy organisation, which says its goal is to improve outcomes for people on low and modest incomes, said poorer families would be about £30 a year better off from the tax cuts, with the top 10% earners £410 better off.
The organisation said better than expected public finances had been given to Mr Hammond, he has an extra £74bn three-quarters of which have been allocated to the NHS, welfare and the income tax changes.
• The annual investment allowance will increase to £1m for two years from the current £200,000.
• There will be lettings relief where landlord lives with the tenant.
• The final 18 months exemption on Capital Gains Tax on private residences’ relief will be reduced to 9 months.
• More tax avoidance measures will be introduced.
• Over the next two years properties with a rateable value of £51,000 or less will have their rates reduced by a third.
• There will be stamp duty relief for homes with shared ownership where the property is worth £500,000 or less.
• A new tax on plastic packaging manufactured or imported that contains less than 30% recyclable plastic is to be introduced.
• Beer, cider and spirits duty is frozen for a year, effectively saving 2p on a pint of beer, 1p on a pint of cider, and 30p on a bottle of Scotch or gin.
• Wine duty will not be frozen and a bottle will go up by 8p from 1 February next year, and a packet of 20 cigarettes has gone up by 33p.
• The National Living Wage will rise by 4.8% from April 2020.
• There will be a new consultation on future increases to the National Minimum Wage from April 2020.
• Personal income tax allowance will increase in April 2019 to £12,500 and Higher Tax Rate to £50,000. This is a year earlier than expected.
• A £30bn package for England’s roads, including repairs to motorways and potholes
• There will be a new mental health service in every Accident and Emergency department and a new hotline.
• A green paper on social care will be published soon.
• Local authorities will have an extra £650m in 2019/2020 for social care.
Education (England Only):
- With immediate effect there will be and extra £400m for schools to buy “little extras”.
- Funding for 10 University Enterprise Zone. UEZ’s are specific geographical areas where universities and business work together to increase local growth and innovation
• Small firms will only have to pay 5% of the cost of apprenticeships rather than 10%
• Employment allowance will be reformed from April 2020 for National Insurance bills below £100,000.
• The one year qualifying period for Entrepreneurs’ Relief will be increased to two years.
• IR35 roll-out to the private sector will be delayed until April 2020 and will only apply to large and medium sized businesses.
• There will be a new digital services tax for large digital companies.
• There will be a new PAYE restriction on the R&D small company scheme.
• £675m will be available towards a future high streets fund to relieve business rates.
• Relief on the rules for the conversion of empty shops into residential properties.
• Reform of corporate intangibles will partially reinstate relief for purchased goodwill
• There will be £1.6bn investment in infrastructure.
• Existing PFI contracts will be honoured.
Tax In Detail
If you would like to know how your tax could change in more details please click here: Budget October 2018 Tax Tables.
With each budget release there are pro’s and con’s, these affect each and every one differently. If you have read or heard about something you feel affects you in this budget and you want to discuss please don’t hesitate to contact us here at Vincent & Co.