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