Autumn Budget 2018 – key tax highlights
Chancellor, Philip Hammond, delivered his third Budget on Monday (October 29) at a time of continued economic uncertainty fuelled by the on-going Brexit negotiations.
The last Budget to be delivered before Brexit, the Autumn Budget 2018 lasted 72 minutes and was used by the Chancellor to say that the era of austerity ‘is finally coming to an end.’ He also predicted that UK borrowing this year would be £25.5 billion – £11.6 billion lower than predicted in March.
A number of wide-ranging measures were announced by the Chancellor, which will impact both businesses and individuals. They include making a one-off payment of £400 million for schools to allow them to ‘buy the little extras they need.’
Mr Hammond also revealed a further £650 million will be given in grant funding to local authorities to spend on social care, an extra £20.5 billion will made available to the NHS over the next five years and all first-time buyers purchasing shared equity homes of up to £500,000 will be eligible for first-time buyers’ relief. There will be a freeze on fuel duty for the ninth year in a row.
From a tax perspective, key highlights include:
- The Annual Investment Allowance will be increased from £200,000 to £1 million for a period of two years from 1st January 2019
- Lettings relief from Capital Gains Tax on let property, which has been the owner’s main residence, will in future only be available where the owner occupies the property with the tenant. This relief is currently worth up to £80,000 in terms of the reduction of capital gain for a married couple. The change takes effect from April 2020.
- Currently the last 18-month period of ownership of a main residence is deemed to be owner occupation for the purposes of the PPR Capital Gains Tax exemption. That 18-month period will now be reduced to nine months; That change starts from April 2020.
- The current qualifying period for Entrepreneurs’ Relief is to be increased from 12 months to two years; Starting from 6th April 2019.
- The IR35 public sector rules are to be extended to the private sector. This extension will be delayed until April 2020 and will only apply to large and medium-sized businesses
- The Personal Allowance will be increased to £12,500 from April 2019
- The Higher Rate threshold will be increased to £50,000 from April 2019
The points listed below are an overview of some of the key points that were announced in the Autumn Budget 2018. The full details can be found here – https://www.gov.uk/government/publications/budget-2018-documents/budget-2018
For one-to-one advice on any of the issues raised in the Chancellor’s latest Budget speech or for guidance on making sure your accounts are up-to-date and submitted in a timely manner, as well as making sure your profitability is kept to a maximum and your tax liability to a minimum, contact David Gillies on 01905 777600.