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Budget 2018- what you need to know

By PaperRocket Accounting, Oct 30 2018 08:00PM


Yesterday, Chancellor Philip Hammond delivered the 2018 Autumn Budget. Below, we summarise the main points, looking particularly at anything that may affect contractors and the self employed.


However, it is worth noting that Mr Hammond himself has said that in the event of a no-deal Brexit, an emergency Budget would need to be made, with the government needing to take a ‘different approach’ to the future of the UK’s economy. Therefore, more than ever before, there is a sense of uncertainty around this Budget, with the knowledge that it could well be all change come next March, when the Spring Statement may well be upgraded to a full Budget.




The main points



IR35


Many contractors, accountants, clients and advisory bodies alike were watching yesterday’s Budget fully expecting the inevitable announcement that IR35 reform was being rolled out into the private sector. And, unlike in 2017 when the same was expected but we were kept hanging with an announcement of a consultation into this issue, reform was indeed announced.


However, it will not be introduced until April 2020, and will only affect medium and large companies (although even the Red Book does not clarify exactly what is defined as medium/large businesses). Of course, as and when we hear more in relation to this, we will let you know.



Personal Tax


• The personal allowance is to rise to £12,500 in April 2019, a year earlier than planned.

• The higher rate income tax threshold to rise to £50,000 in April 2019.

• The National Living Wage to rise to £8.21/hour from April 2019.


As tax rates and thresholds in Scotland are different, the Scottish Finance Secretary will be putting forward his plan for Scotland on 12th December 2018.



VAT


The current VAT threshold of £83,000 will be maintained until 2022.



Entrepreneurs Relief


Contrary to speculation, this is not being scrapped. However, the qualifying ownership will be extending from 12 months to 2 years, with transitional rules applying when the claimant’s business ceased before 30th October 2018.



Annual Investment Allowance


AIA is increasing to £1million for two years beginning in January 2019.



Stamp Duty


All first time buyers purchasing shared ownership homes of up to £500,000 will now also be eligible for first time buyers’ relief- to also be applied retrospectively back to the last Budget in 2017.



Universal Credit


Since its introduction, Universal Credit has certainly been controversial. However, the Chancellor insisted that it is here to stay and pledged an extra £1billion to help welfare claimants transfer over to the new system. Work allowances for UC are to be increased by £1.7billion with Hammond estimating that 2.4 million working families will benefit by £620/year.



At a glance


• Beer, cider and spirits duties to be frozen.

• Fuel duty to be frozen (for the 9th year in a row).

• Tobacco duty to rise with inflation plus 2%.

• An extra £20.5 billion pledged to the NHS over the next 5 years, with a minimum extra £2 billion for mental health services.

• New mental health crisis centres with a 24 hours mental health crisis hotline.

• £30 billion promised to repair England’s roads of potholes and other minor repairs.

• A new tax on plastic packaging which does not contain 30% recyclable material.

• Remote Gaming Duty to increase to 21% for online gambling on ‘games of chance’ from 2019.

• New 2% Digital Services Tax on UK revenues of large technology companies from April 2020, for profitable companies with global sales of more than £500 million worldwide.

• An extra £500 million pledged for Brexit preparations.

• An extra £160 million for counter-terrorism police.

• £10 million for mental health care veterans, marking the centenary of Armistice.

• Business rates bill for firms with a rateable value of £51,000 or less to be cut by third over two years, to try and rejuvenate High Streets.



PaperRocket Accounting provide accounting and tax services to professional contractors and freelancers working in the UK.


We offer our clients a flexible choice of fixed fee monthly packages which cover all of their accounting and tax needs (so no hidden costs or surprise bills!). All of our accounting packages include a monthly subscription for a cloud accounting software subscription provided by the awarding winning FreeAgent.


Each of our clients is given their own dedicated qualified accountant with unlimited access in person, telephone, or by email.


We pride ourselves on our client satisfaction and customer service and were shortlisted as 'Welwyn Hatfield Business of the Year 2018' in the SME Hertfordshire awards, 'Small Practice of the Year 2016' in the AccountingWEB practice excellence awards, as well as FSB Hertfordshire Service Excellence finalists in 2015 and 2016.


To find out how we can help you please get in touch now.


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