Budget 2018

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 spread over a period of 50 years.

Business rates continues to be an issue for many businesses, particularly those based in the high street and it was pleasing to see the Chancellor announce plans for a one-third reduction for retail properties with a rateable value below £51,000.

There was also good news for businesses that are fearful of the so-called IR35 tax regime, with the expected extension of the new rules to the private sector being delayed by 12 months to April 2020. Furthermore, the changes will now only apply where the business is providing services to a large or medium organisation.

Overall, today’s 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 … and the next one may not be as favourable!

Click on the headings below to read further information on today’s announcements:

Please click here if you would prefer to read and download our Autumn Budget 2018 highlights as a pdf.

If you have any queries on the 2018 Autumn Budget please do not hesitate to contact one of our tax specialists on 01228 530913 or 01768 864466.

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