The Chancellor has today announced his Autumn Budget 2018 saying that ‘austerity ends’.
Government finances are in a better state than expected and there are more treats than tricks in this announcement. The Budget covers a wide scope, effecting many aspects of our lives, but we have pulled together the main accounting and tax points for you below:
Personal tax and wages
- The personal allowance will rise from £11,850 to £12,500 next April, which is a year earlier than expected, meaning people can earn more before they have to start paying tax.
- The point at which people starting paying higher rate tax at 40% will increase from £46,350 to £50,000 from next April. This means basic rate payers will be £130 better off, those on the higher rate £860 and those on the additional rate £600 better off.
- After that the rates will increase with inflation meaning that a pay rise may not automatically move you into a higher rate of tax.
- The National Living Wage, for workers 25 and over, currently £7.83 per hour, will rise to £8.21 an hour from next April.
- Wages growth is at its highest rate in almost a decade.
Business and digital
- A new 2% Digital Services tax will be introduced on the UK revenues of profitable global companies with turnover more than £500m – expect this to affect the likes of Amazon, Google and Facebook – and is expected to raise £400m per year. This may well only be temporary until new international trade deals are done.
- The Annual Investment Allowance (AIA) will be increased from £200k to £1m for two years meaning greater tax relief on those capital purchases and projects.
- The contributions to the Apprenticeship Levy by small companies with a payroll of over £3m will drop from 10% to 5%.
- Businesses with a rateable value of £51,000 or less will see their rates bill cut by a third over two years which is expected to benefit 90% of independent companies, saving them up to £8,000.
- On top of the £900, set aside for the cut in business rates above, £650m has been set aside for a Future High Streets Fund to help councils rejuvenate high Streets.
- From 2020 the way self employed status is taxed – IR35 – will be extended.
- After HMRC identified £300m of frauds in R&D tax credit claims, so as a result the amount that a loss making company can receive in R&D tax credits will be capped at three times its total PAYE and National Insurance liability.
Some of these budget announcements are subject to further consultation, and should there be any major uproar may well be totally changed, but for now this is what you can expect to happen.