Last Budget before Brexit?

Philip Hammond delivered a pre-Brexit Budget that, from a tax viewpoint, was reasonably favourable both for individuals and businesses.

The largest tax giveaway (costing almost £3 billion) was bringing forward the planned increases in the personal income tax allowance (from £11,850 to £12,500) and the higher rate tax allowance (from £46,350 to £50,000).  The government’s manifesto pledge was to reach these targets by April 2020, but these will now be introduced one year early in April 2019.

To the extent that there were unfavourable tax changes for individuals, these were relatively modest and were restricted primarily to capital gains tax.  Thankfully the very advantageous Entrepreneurs’ Relief will largely remain in its current form, although the qualifying ownership period is being increased from one year to two years. However, this will only apply to disposals after 5 April 2019, which allows a window of opportunity for those individuals who are planning a sale and may not meet the new two year minimum ownership period.

There was plenty of good news for businesses, with the most favourable being a £1 billion tax giveaway with a significant increase in the Annual Investment Allowance from £200,000 to £1 million. The measure will be temporary in nature and will apply for a two year period commencing on 1 January 2019.

A new SBA (Structures and Building Allowance) has been immediately introduced which will allow businesses to claim tax relief on the construction of new commercial buildings, although somewhat disappointingly the rate of relief is effectively being spreading this benefit  over a period of 50 years.

Despite continued speculation surrounding changes to pension rules – none were announced.

Overall, the Budget was much more positive than expected, but we would add the caveat that Philip Hammond has also indicated that there would have to be another Budget if there is a no-deal Brexit! So this might not be the last Budget before Brexit after all (whether it happens or not)… and the next one may not be as favourable!

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Jan 23

No events today
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