If you missed Chancellor Philip Hammond’s budget announcement on Tuesday, we have summarised the key points for you below.
Corporate Tax & Spending
From April 2020, the UK will introduce a Digital Services Tax (DST), which will raise £400m annually. The DST would only be paid by profitable companies which generate at least £500m a year in global revenues.
Also from April 2020, reforms to IR35 payroll rules for contractors in the public sector will be extended to large and medium-sized firms in the private sector, which means they will pay more in tax and NI Contributions.
There’s good news for smaller companies taking on apprentices, as the Apprenticeship Levy will be halved.
The use of e-passport gates at Heathrow and other airports to include visitors from the US, Canada, New Zealand, Australia and Japan will be introduced, to support businesses, and £200m more funding will be given to the British Business Bank. Annual Investment Allowance will also increase from £200,000 to £1m for two years.
Mr Hammond stressed his commitment to investing in technology with £1.6bn going “to support our modern industrial strategy”.
As we touched on in our last post, with the anticipation of a ‘no deal’ Brexit, the Chancellor has allocated an extra £500m to government departments to help with their preparations.
Wages growth is at its highest in nearly a decade with 3.3 million more people in work since 2010 and 800,000 more jobs forecast by 2022.
Forecast for GDP growth in 2019 will improve from 1.3% to 1.6%, then 1.4% in 2020 and 2021; 1.5% in 2022; and 1.6% in 2023.
Wages and Tax
From April 2019, personal allowance is increasing to £12,500 and the higher rate threshold to £50,000, one year earlier than planned. According to Mr Hammond, this will save £130 for a typical basic rate taxpayer.
The National Living Wage will also increase by 4.9% from £7.83 to £8.21 from April.
Duty on fuel has been frozen for the ninth successive year.
Tobacco duty escalator will continue to rise at inflation plus 2%. While duty on wine will continue to rise in line with retail price index (RPI) inflation, duties on beer, cider and spirits are frozen.
Welfare and Debt
The controversial Universal Credit will see an additional package of £1bn over five years for new claimant protections. Work allowances will be increased by £1,000 per year to “benefit 2.4 million working families with children and people with disabilities by £630 per year”. In a further effort to tackle problem debt, the Government will consult over an interest-free loan facility for consumers.
Until April 2020, all England retailers with rateable value of £51,000 or less will see their business rates bill cut by a third. And with the “High street under pressure as never before”, the chancellor offers support with £675m in co-funding for a Future High Streets Fund to help councils transform town centres. There will also be a new mandatory business rates relief for all public lavatories.
Saving the Ocean
To support the fight against plastic waste in our oceans there will be new tax on the manufacture and import of plastic packaging which contains less than 30% recycled plastic.
An additional £950m will be allocated for the Scottish government, £550m for the Welsh government and £320m for a Northern Ireland executive.
For first-time buyers of shared ownership properties valued up to £500,000, Stamp Duty is to be abolished, applied retrospectively to the date of the last budget. And a further £500m will go to the housing infrastructure fund.
Local authorities will receive an immediate boost of £420m to help with the cost of fixing potholes.
Schools will see an injection of a one-off £400m to help with supplies.
In the next financial year, police counter-terrorism will be boosted by £160m. And an additional £1bn will be allocated for the Ministry of Defence to be spent over the next two years to help fight cyber warfare and support the submarine programme.
Mr Hammond asserted: “We are delivering historic £20.5bn real terms increase for the NHS in full over the next five years.” An NHS 10-year plan includes a new mental health crisis service including specialist ambulances and a hotline. Local authorities in England are set to receive an extra £650m of grant funding for 2019/20 to reinforce social care.
For more detailed information on the 2018 Budget, you can search documents on Gov.uk.