The Budget 2018 had a few surprises up it’s sleeve but alot of the measures seemed to be on hold until post Brexit and the subsequent spending review.  Public spending is now in control and in the words of the Chancellor Philip Hammond “The era of austerity is finally coming to an end”; “The hard work of the British people is paying off”, but both of these statements tempered by the warning that if there is a major shift or change in conditions then a Spring Budget could be on the cards.  However ahead of the spending review which will be post Brexit a few measures were announced:

  • NHS – additional funding in a number of areas for mental health which has become a headline issue in recent times
  • £650m for social care to local authorities
  • £1bn for the MoD for defence spending
  • £160m for counter terrorism spending
  • £10m donation for armed forces covenant trust
  • Funding for renovation of village halls built around WW1
  • £1.7m for school programmes on 75th anniversary of liberation of Bergen-Belsen concentration camp

and then for the specific sectors:
Business

  • The annual investment allowance is being increased from £200k to £1m, affecting only larger businesses
  • Digital platform businesses – introducing UK tax on tech giants from Apr 2020 (but excluding tech startups)
  • Talking tough on tax evasion, lots of measures particularly in cross border trade and VAT
  • Smaller firms apprenticeship levy reduced from 10% to 5%
  • VAT registration limit remains on hold for another 2 years at £85k
  • IR35 the expected extension to the private sector is going ahead from April 2020 but only for large and medium companies, recognition that small companies would not be able to cope or understand the rules!
  • For the High Street – changes in planning and support for councils in redeveloping town centres; small retailers with £51k or less rateable value will have rates bill cut by 1/3
  • Environmental measures – additional taxes on imported plastics where <30% recycled

Individuals

  • Personal tax allowance and higher rate threshold – increased to £12,500 and £50,000 from April 2019 one year earlier than planned
  • Duties
    • fuel duty frozen
    • spirits, beer and cider duty frozen
    • wine rpi increase
    • tobacco rpi+2%
  • Universal credit – additional measures to help transition
  • National living wage – 4.9% increase to £8.21 from April next year
  • The rules of principal private residence are being tightened up to remove more loopholes which are being exploited, the main one being reduction in the period deemed to be PPR if you have lived in a property from 18 months to 9 months
  • First time buyers – extension of stamp duty to shared ownership homes with values upto £500k

The Chancellors hands are tied due to continued austerity albeit that it is coming to an end, and also Brexit.  He has let a few sweeteners out in Budget 2018 but appears from his speech he is keeping quite a reserve for post Brexit issues so apart from increases in personal tax allowances and some certainty over IR35 there is little real change until next year.  As usual the detail will be released over the next few weeks and you should seek professional advice before taking any steps based on these contents. If you would like advice in this or other areas feel free to call. Alastair Wood, AW Accounting, Gravesend, Kent – Accountants who “speak your language”