Autumn 2018 Budget Breakdown

31st October 2018

Autumn 2018 Budget Breakdown

A challenging environment with ongoing EU negotiations did not deter Philip Hammond from delivering a confident Autumn budget on Monday.  Described by the Chancellor as “a turning point in our history” where “the stakes could not be higher” the last budget before Brexit was certainly not complacent but rather took the opportunity of a positive UK economic outlook to signal the end of austerity, albeit with the balance of discipline.  Britain is officially “open for business” was the overriding sentiment.  We give a 2018 budget breakdown of the key statements made.

2018 budget breakdown
 

Income Tax

  • The personal allowance will increase to £12,500 and the higher rate threshold will increase to £50,000 from April 2019. This timeline is 1 year ahead of the Government’s original manifesto pledge
  • Thereafter the rates are set to increase annually by CPI inflation
  • The 0% rate of savings allowance will remain at £5,000
  • From April 2020, the government will reform off-payroll working rules (IR35) for the private sector, bringing them in line with the changes made to the rules in the public sector last year

 

National Insurance

  • The abolition of Class 2 NICs will continue to be delayed for the foreseeable future

 

Capital Gains Tax

  • Capital Gains Tax allowance will increase by £300 up to £12,000 from April 2019
  • Qualifying conditions for Entrepreneurs’ Relief must be met for a minimum period of 24 months from April 2019, this is extended from the current 12 months
  • Lettings relief will be reformed from April 2020 so that it will only apply in the instance that the owner of the property is in shared occupancy with the tenant
  • From April 2020, the final period exemption for Private Residence Relief will reduce from 18 months to 9 months

 

Stamp Duty

  • For all relevant purchases from 29th October 2018, first-time buyers’ relief in England and Northern Ireland will be extended to  include all qualifying shared ownership property purchasers, regardless of whether the purchaser chooses to pay Stamp Duty Land Tax.  The new rules will also be backdated to 22 November 2017, meaning all those eligible who had previously not claimed the relief will be able to claim a refund

 

Brexit

  • A £500m pot has been reserved for preparations to leave the EU and the Spring Statement in March will be upgraded to a full Budget if deemed necessary

 

Pensions

     

  • The lifetime allowance will increase in line with CPI to £1,055,000 from April 2019
  • The DWP will consult later this year on a more detailed design for the Pensions Dashboard.  Using additional 2019/2020 funding, the DWP will work closely with both financial tech firms and the pensions industry to develop more industry-led solutions that will benefit end users.
  • Pension cold calling will become illegal under forthcoming legislation following a response to a public consultation
  • Following the 2017 review of auto-enrolment, the DWP will publish a paper outlining the approach to increasing pension participation and savings persistency within the self-employed.

 

Enterprise Investment Schemes (EIS)

  • Following a consultation period regarding Knowledge Intensive EIS Funds, the government formally published its response as part of the Budget.  From April 2020, the Approved EIS Fund structure will change to focus on Knowledge Intensive Companies (subject to legislation, Brexit outcomes and EU State Aid approval)

 

ISAs

  • The ISA allowance will be remain at £20,000 but the annual allowance for Junior ISAs and Child Trust Funds will increase in line with CPI to £4,368 for 2019/20

 

Business and Digital

A new 2% Digital Services Tax on the revenues of certain digital businesses will be implemented from April 2019, encouraging a move to a fairer payment of taxes within this industry, more reflected of the value that is gained from UK-based users.  The specific areas of digital technology include:

  • search engines
  • social media platforms
  • online marketplaces

 

Plastic packaging

A tax on the production and import of plastic packaging will be introduced from April 2022 to incentivise manufacturers and retailers to produce more sustainable packaging solutions.   Following consultation, it is expected that this tax will apply to packaging containing less than 30% recycled plastic.

You can read the full Budget statement at the government website.  If you or your business have been impacted by the announcements and you would like to discuss these in more detail, please do not hesitate to contact one of the team.   

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