Chancellor Philip Hammond has delivered his second Autumn Budget, exactly five months before Britain is due to leave the European Union.
Budget Highlights:
- Two-year cut in business rates for small retail properties from April 2019
- Increase in personal allowance brought forward to April 2019
- Annual Investment Allowance increasing to £1 million
- New 2 per cent Digital Services Tax to be introduced from 2020
- Stamp duty exemption for first-time buyers extended to shared equity homes
- New tax on non-recycled plastic packing
- VAT threshold to remain unchanged until April 2022
- Access to Employment Allowance restricted from April 2020
The Chancellor was in bullish mood, asserting that the era of austerity is ‘finally coming to an end’ after a ‘long, hard journey’. However, he maintained that UK debt remains too high and highlighted the importance of continuing to reduce debt and borrowing.
Citing the latest economic forecasts from the Office for Budget Responsibility, Mr Hammond revealed that the UK growth forecast has been upgraded from 1.3 per cent to 1.6 per cent for 2019, while public borrowing in 2018/19 is set to be £11.6 billion lower than previously forecast at the time of the Spring Statement.
With the Brexit negotiations ongoing, the Chancellor announced an additional £500 million of departmental funding for Brexit preparations. He also raised the possibility of upgrading the 2019 Spring Statement to a ‘full fiscal event’ if no deal was agreed.
Key announcements for businesses include a two-year cut in business rates for small retail properties in England from April 2019, worth £900 million, together with a £675m fund to help rejuvenate high streets. The Annual Investment Allowance will also increase from £200,000 to £1 million for a period of two years.
Meanwhile, individual taxpayers are set to benefit from a bringing forward of the planned increase in the income tax personal allowance, which will rise by a further £650 in April 2019 to £12,500. The higher rate threshold will also increase from £46,350 to £50,000. However, from 2021, both thresholds will rise in line with CPI inflation.
The stamp duty relief for first-time homebuyers will be extended to shared equity purchases of up to £500,000, while the lifetime allowance for pension savings will increase to £1,055,000.
As widely anticipated, the Chancellor confirmed plans to introduce a new tax on the UK revenues of digital services companies from 2020, applying to those with global sales of more than £500 million per annum. However, plans for a tax on takeaway coffee cups were overruled in favour of a new tax on plastic packaging containing less than 30 per cent recycled material.
Turning to duties, tax on beer, most cider and spirits have been frozen. Wine duty will rise in line with inflation, while tobacco duty will continue to rise by inflation plus 2 per cent.
Other announcements include confirmation of an extra £20.5 billion for the NHS over the coming five years, together with additional funding to help welfare claimants transfer to Universal Credit. An additional £950 million will be made available for the Scottish government, £550 million for the Welsh government and £320 million for the Northern Ireland Executive for the period to 2020/21.
If you have any concerns or queries relating to the announcements made within the Autumn Budget, we are available to guide you through the tax maze and help you with bespoke solutions to ensure that you and your business are as tax efficient as possible.
Contact Joanne Holland or your usual Beavis Morgan Partner for more information and assistance. We are available to discuss any action you may be considering, and to review your long-term plans and objectives.
We will also shortly be publishing our Budget Autumn Statement 2018 Summary Guide. To receive a copy directly to your inbox, email georgina.swain@beavismorgan.com.