As the Chancellor announced, there was a lot of leakage prior to the speech but as always, the Chancellor has the odd rabbit to “pull out of the hat”, the main bunny this time being the bringing forward of the manifesto pledge surrounding increasing personal allowances and the higher rate band to April 2019. Changes have also been made to Capital Allowances and Entrepreneurs Relief.
We have summarised the key changes below and some of the rumoured changes that have not come to fruition.
We at BHP will be working throughout the evening to find the devils in the detail, and it is looking like we could have a long night ahead. Keep tuned to our Twitter account (@bhpaccountants) to find out everything you need to know.
Key measures announced
- Personal Allowance to rise to £12,500 from April 2019 (manifesto promise moved forward 1 year).
- Basic rate band to extend to £50,000 from April 2019 (manifesto promise moved forward 1 year).
- Entrepreneurs’ Relief – 12 months qualifying period required prior to disposal to be increased to 24 months. However, the 10% rate and £10 million limit remain the same.
- Annual Investment Allowance (AIA) to increase from current £200,000 to £1 million from 1 January 2019.
- From October 2018, 2% annual deduction available against profits for the cost of any new commercial structures and buildings.
- Businesses occupying properties with rateable value below £51,000 to see their business rates cut by a third.
- Small firms will only have to pay 5% of the cost of apprenticeships rather than 10%.
- From April 2020, employment allowance to only be available for companies with Employers National Insurance bill below £100,000
- Principle Private Residence relief to limit lettings relief to where landlord lives with the tenant.
- Principle Private Residence relief to reduce final 18 months exemption to 9 months
- VAT threshold frozen at £85,000 for a further two years from April 2020 to April 2022.
- R&D relief for SMEs – PAYE restriction to be reintroduced.
- Stamp duty relief for homes with shared ownership where the property is worth £500,000 or less.
- From April 2020, “tech-giants” operating media platforms and search engines will pay 2% tax on revenues earned which link to UK users.
- From April 2019, large businesses will be able to invest 25% of their apprenticeship levy to support apprentices in their supply chain.
- From April 2019, National Living Wage to increase to £7.83 per hour to £8.21.
- Fuel Duty will remain frozen for the 9th year in a row.
- Duty on beer, cider and spirits to remain frozen.
- £20.5 billion increase in budget for the NHS.
- Within the £20.5 billion above, NHS will increase mental health spending by more than £2 billion a year by 2023-24. New Mental Health Crisis Support Service to be launched.
- £400 million extra for schools – £10,000 for the average primary school and £50,00 for the average secondary school.
- £30 billion to improve road conditions.
- Extra £650 million for Local Authorities in 2019/20 for social care.
- £1.6 billion investment in infrastructure.
- Existing PFI contracts will be honored, but there won’t be anymore.
- IR35 roll out to private sector has been delayed until April 2020 and will only apply to large and medium sized businesses.
- New tax on plastic packaging manufactured or imported that contains less than 30% recyclable plastic.
Finance Act 2019
The Treasury has announced that the Finance Bill will be published on Wednesday 7 November 2018 which will include the detailed provisions. We will be able to update further on these provisions when they are released.
The Scottish Parliament has announced that its Draft Budget 2019/20 will be published on 12 December 2018.
From 6 April 2019 a new Welsh income tax rate will apply in a similar way to Scotland. A draft Welsh Budget was published on 2 October 2018, and HMRC has issued a technical note about the Welsh rate of tax.