Budget 2018

Going into Budget 2018, between leaks and political instability, few expected Chancellor Philip Hammond would have surprises left to spring.

How wrong we were.

Under pressure to support No 10’s ‘end of austerity’ message, bolstered by revised growth forecasts from the Office of Budget Responsibility, and safe in the knowledge that it could all go out of the window in the event of a no-deal Brexit, the Chancellor gave the most eventful Budget speech of recent years.

There were commitments to increased public spending on emotive issues such as schools, high streets, hospitals, village halls, potholes and public toilets.

There was a crowd-pleasing swing at global tech giants in the form of a new UK digital services tax, coupled with a two-year cut in business rates for some independent shops, cafes and pubs.

Minimum wages are to increase, stamp duty relief for first-time buyers is extended, fuel duty remain frozen, as do duties on beer, cider and spirits – all gestures intended to signal that sacrifices made by the British public have paid off.

There were also many specific technical changes in both business and personal tax, including the headline measure of an increase to the personal allowance and the higher-rate threshold from April 2019, in line with last year’s Conservative manifesto pledge, but delivered a year early.

But there are hidden thorns, too. For example, as long expected, IR35 reforms will be extended into the private sector, while entrepreneurs and lettings reliefs are being tightened up.

To understand how announcements made in the Budget on 29 October 2018 will affect your financial situation, read on. 

Business – annual investment allowance to increase to £1m

Corporation tax The main rate of corporation tax remains at 19% for 2019/20. The intention to cut the rate of corporation tax to 17% in 2020/21 was reiterated. Annual investment allowance The annual investment allowance will be temporarily increased from £200,000 to...

Personal – income tax thresholds to rise

Personal allowance The personal allowance increases from £11,850 to £12,500 from 6 April 2019. The allowance will also remain at this level for the 2020/21 tax year. Basic-rate band The basic-rate limit increases from £34,500 to £37,500 from 6 April 2019....

VAT-registration threshold to hold firm until 2022

VAT-registration threshold frozen until 2022 The VAT-registration threshold was frozen at £85,000 until 1 April 2020 in the last Budget, and the Chancellor extended that until 1 April 2022. HMRC had consulted on the VAT-registration threshold following suggestions...

Other announcements

Charity taxation From April 2019, the Government will introduce measures to reduce administrative burdens on charities. These include: An increase from £5,000 to £8,000 in the upper limit for trading charities can carry out without incurring a tax liability where...