a little light BUDGET news
BUDGET SUMMARY 29.10.18
- Hammond said austerity is “finally coming to an end”
- Growth forecast for 2018 was downgraded to 1.3% from 1.5% in March
- Growth forecast for 2019 raised from 1.3% to 1.6% and annual forecasts raised to 1.4%, 1.4%, 1.5% and 1.6% in 2020, 2021, 2022 and 2023 respectively.
- Most economic commentators describe these figures as anything from “poor” to “woeful”
There is much Budget news online. Some of the aspects impacting on individuals and small companies listed below in bullet points.
Remember …other new tax legislation was already planned to come into effect so what’s mentioned below is the new stuff from yesterday.
Hammond had plenty of “will be”, “in the future” and so on. Very little “now”.
Budget plans dependent on a Brexit deal. If no deal then who knows what will happen? Most likely some sort of “emergency” Budget speech next March.
For now …….
- The tax free personal allowance threshold increases from £11,850 to £12,500 in April 2019 (a year earlier than planned).
- The 40% higher rate income tax threshold also increases from £46,350 to £50,000 in April 2019.
- Both rise in line with inflation thereafter.
- Starting tax rate for savings remains kept at £5,000 for 2019/20.
Comment …these tax changes put more in the hands of the higher paid than the basic rate taxpayer though this is mitigated somewhat by increases in National Insurance.
Good examples of that the Budget may mean in individual situations……
- National Living Wage increasing by 4.9%, to £8.21 an hour, from April 2019.
Capital Gains Tax
- “Lettings relief” can reduce the CGT on the sale of a property that was, at some point, used as your main home but which you have since rented out as residential accommodation.
- In future this relief will only apply where the owner of the sold property was in shared occupancy with their tenant.
- This means that landlords will probably no longer be able to claim the £40,000 lettings relief on their Capital Gains Tax (CGT) bill when selling a qualifying property.
- The change will apply from April 2020.
- In a further tax hike, from April 2020, the 18 months’ “PPR main residence relief” exemption period, on sale of your main home, is to be reduced further to 9 months.
(No changes to the 36-month final period exemption available to disabled people or those in a care home.)
Pensions and ISAs
- The maximum lifetime investment into pensions – the “lifetime allowance” – increases 2019/20 in line with CPI to £1.055 million.
- (no changes to pensions tax relief)
- Individual Savings Account (ISA) annual investment limits remain unchanged at £20,000.
Business equipment investment
- The “Annual investment allowance” (AIA) increases for two years to £1 million for qualifying expenditure on plant and machinery between 1st January 2019 and 31st December 2020.
- VAT registration threshold frozen for a further two years meaning it will remain at £85,000 until 2022.
Other business note
- Reforms too on business rates and the apprenticeship levy.
Stamp duty and housing
- All first-time buyers purchasing shared equity homes of up to £500,000 are to be exempt from stamp duty.
- £500m to be provided for the Housing Infrastructure Fund designed to enable a further 650,000 homes to be built.
- New partnerships with housing associations in England intended to deliver 13,000 homes.
- Guarantees of up to £1bn for smaller house-builders.
- Work allowances for universal credit to be increased by £1.7bn.
- Hammond says “2.4 million working families with children to benefit by £630 a year”.
- An extra £1bn to be provided to help welfare claimants transfer to the new benefit.
- Chancellor insists this controversial system is “here to stay”.
Other general Budget notes …..
- Beer, cider and spirits duties to be frozen.
- Wine duty to rise by inflation, 8p, in February 2019.
- Tobacco duty will continue to rise by inflation plus 2%.
- A packet of 20 cigarettes up by 33p at 18.00 GMT on Budget day.
- A 10g pack of cigars goes up by 17p.
- Fuel duty frozen for ninth year.
- Remote Gaming Duty increases to 21% for online gambling on “games of chance” from 2019.
- New 2% “digital services tax” from April 2020 on UK revenues of profitable companies with global sales of more than £500m.
- Private finance initiative (PFI) contracts to be abolished in future. New centre of excellence to manage existing deals “in the taxpayer’s interest”.
- An extra £160m for counter-terrorism police.
- An extra £1bn for armed forces, for cyber-capabilities and the UK’s new nuclear submarine programme.
- £10m for mental health care for veterans, to mark the centenary of the Armistice which brought World War One to an end.
- £1m to fund school trips to World War one battlefields.
- £1.7m in Holocaust education programmes to mark the 75th anniversary of the liberation of Bergen-Belsen concentration camp in northern Germany.
- Confirmation of an extra £20.5bn for the NHS over the next five years.
- A minimum extra £2bn a year for mental health. New mental health crisis centres, providing support in every accident and emergency unit in the country. More mental health ambulances and a 24-hour mental health crisis hotline.
- All ONLY if the UK leaves the EU with a deal.
- £10m for air ambulances.
- A £30bn package for England’s roads, including repairs to motorways and potholes BUT ONLY a one-off £400m “bonus” to help schools buy “the little extras they need” “this year”.
- NO announcement of extra funding for main school issues such as staff salaries/recruitment/retention, building repairs or for front line policing.
- Opening the use of e-passport gates at airports, currently available to people from Europe, to those from the USA, Canada, New Zealand, Australia and Japan.
- Air Passenger Duty to be indexed in line with inflation.
- A new tax will be introduced on certain plastic packaging.
- £60m will be provided for planting trees in England.
- £10m will be provided to deal with abandoned waste sites.
- Extra £500m will be provided for preparations for leaving the EU.
Lastly ….a new commemorative 50p coin to be issued to mark the UK’s departure from the EU. No comment.