Autumn Budget 2018 announcements made on 29 October.
The first Budget to be held on a Monday since 1962 may well be Philip Hammond’s last (we’ve said that before), as there could be some scary consequences ahead from Brexit, and of course Halloween approaches.
And whilst the Prime Minister has declared that austerity is over, much to the horror of the Treasury, the Chancellor remains keen to keep a tight grip on the money to cover post-Brexit contingencies and the extra £20bn Theresa May has promised the NHS.
Philip Hammond wants to keep a lid on public debt – ten years on from the financial crash – although it has been lifted a little to keep fuel duty frozen (costing the Treasury another £10bn) and freeing local authorities to borrow to build more council houses – after the Prime Minister overruled him on both counts.
So, if austerity has ended, is this the Dawning of the Age of Prosperity? We shall see.
We could well be back here shortly with another Budget if all goes badly with the Brexit negotiations, and the Treasury has to shred its plans, or if the government fails to get its plans through Parliament.
In that sense, this is very much a holding Budget until the economic landscape becomes clearer, or we get a new Chancellor.
Brief recap – key changes previously announced:
- Corporation tax reduced from 20% to 17% by 2020
- VAT threshold frozen at £85,000 for two years – reconfirmed
- Making VAT Digital to start from 1 April 2019 for VAT-registered businesses, and from 1 October 2019 for trusts, charities and VAT groups etc.
- Making Tax Digital delayed until at least April 2020
- Fuel duty frozen for the ninth year in a row
- Tips left for workers will go to them in full for the service they provide
- Strengthening the Prompt Payment Code to end late payments to small businesses
- Additional stamp duty on foreign buyers of UK properties
- New tax/legal/pension consultation on civil partnerships for heterosexual couples
- Lifting the cap on local authority borrowing for new house builds
- New loan charges on disguised remuneration starting 5 April 2019
Autumn Budget 2018 key measures announced:
- “Era of austerity is finally coming to an end” – says the Chancellor (but discipline will remain)
- The next Spring Statement could be a “full fiscal event”
- Full public spending review between April and June 2019, subject to Brexit
- New mental health service in every hospital A&E and a new crisis hotline
- Green paper on social care to be published “shortly” (delayed from the summer)
- Immediate £400m for schools to buy “the extras they need” this year ahead of the spending review – “it’s a nice thought but will not solve the funding crisis,” says Pam Tuckett
- Extra £650m for Local Authorities in 2019/20 for social care
- £1.6bn investment in infrastructure
- Existing PFI contracts will be honoured, but there won’t be anymore
- Annual investment Allowance increasing to £1m for 2 years (from current £200,000)
- Small firms will only have to pay 5% of the cost of apprenticeships rather than 10%
- Employment allowance – from April 2020 reformed for NI bills below £100,000
- Limit lettings relief to where landlord lives with the tenant
- CGT private residences relief – final 18 months exemption reduced to 9 months
- Entrepreneurs’ Relief – one year qualifying period increased to two years.
- IR35 roll out to private sector – delayed until April 2020 and will only apply to large and medium sized businesses
- Digital platform businesses – new digital services tax for large digital companies
- More tax avoidance measures to be introduced
- R&D small company scheme – new PAYE restriction
- Business rates – £675m towards a future high streets fund
- Conversion of empty shops into residential prop
- Next two years – properties with a rateable of £51,000 or less, their rates will be cut by a third
- Stamp duty relief for homes with shared ownership where the property is worth £500,000 or less
- New tax on plastic packaging manufactured or imported that contains less than 30% recyclable plastic
- Beer and cider duty frozen for a year (as well as spirits)
- April 2019 – National Living Wage will rise by 4.9% to £8.21
- April 2019 – National Minimum Wage will rise as per the Low Pay Commission’s recommendations.
- Personal income tax allowance increases – from April 2019 to £12,500 and Higher Rate Threshold to £50,000 – a year earlier than expected. Future increases will be by reference to inflation
- Reform of corporate intangibles – to partially reinstate relief for purchased goodwill
Finance Act 2019
Whilst we have some information today on these Budget announcements, the detailed provisions will follow in the Finance Bill, which the Treasury has announced will be published on Wednesday 7 November 2018.
The Scottish Parliament has announced that its Draft Budget 2019/20 will be published on 12 December 2018.
From 6 April 2019 a new Welsh income tax rate will apply in a similar way to Scotland. A draft Welsh Budget was published on 2 October 2018, and HMRC has issued a technical note about the Welsh rate of tax.