Summary of the Budget 29 October 2018

Chancellor Philip Hammond kicked off his Autumn Budget – the first on a Monday since 1962 – by announcing a “new chapter in the country’s economic future”. He hailed his Budget as signalling the “era of austerity finally coming to an end”.

Measures outlined include:

  • The National Living Wage to be raised to £8.21 from April, from £7.83.
  • The personal tax allowance to be raised to £12,500 from April next year, with the Higher Rate Threshold lifted to £50,000. The personal allowance currently stands at £11,850, with the higher rate £46,350.
  • The introduction of a UK Digital Services Tax – targeting tech giants, not start-ups. It will be paid by firms generating £500m in global revenues. The tax comes into effect in April 2020 and is expected to raise more than £400m a year.
  • No change to level of entrepreneurs’ relief available, but the ownership period doubled to two years to better target relief that is worth up to £1m to business owners.
  • Help for the high street by cutting business rates by a third for all retailers in England with a rateable value of £51,000 or less. That will mean an annual saving of “up to £8,000 for up to 90% of all independent shops, pubs, restaurants and cafes”.
  • Launch of a £675m ‘Future High Streets Fund’ to support councils to draw up plans for the transformation of their high streets.
  • Halving of the amount smaller firms have to pay (the Apprenticeship Levy) when they take on apprentices.
  • Local councils in England to get an additional £650m in 2019-20 for social care spending. The Chancellor also pledges a further £84m over the next five years to expand children’s social care programmes to 20 further councils.
  • MoD spending to be raised by £1bn more for this year and next.
  • Schools to share a £400m pot – a one-off capital payment
  • Potholes – £420m fund to tackle them.
  • The abolition of PFI and PF2.
  • Extension of the cancellation of stamp duty for first-time buyers on properties up to £300,00, and to first-time buyers of shared ownership properties valued at up to £500,000. This measure will be retrospective, so any first-time buyer who has made a purchase since the last Budget will benefit.
  • A freeze on fuel duty for another year on beer, cider and spirits
  • No rise in Air Passenger Duty for short-haul flights.
  • Regarding Universal Credit, an extra £1bn will be invested in the next five years, to protect those migrating to UC.
  • Growth going forward will improve next year from the 1.3% forecast in the Spring Statement to 1.6%. In 2020, the OBR expects growth of 1.4%; 1.5% in 2021 and 2022; and 1.6% in 2023. The Chancellor promised a new path for public spending, with a full spending review in 2019.

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