The End of Austerity?

Today’s Budget was the last one before the UK leaves the EU and Philip Hammond’s key message was an end to austerity – but has it left you any better off?

Income tax: The personal allowance will rise to £12,500 and the higher rate threshold to £50,000 in April 2019, which is one year earlier than originally proposed.

Stamp Duty: There is an extension of SDLT exemption for joint first-time buyers buying a property up to £500,000. As this extension is retrospective, some first-time buyers may be able to claim a refund.

Business Rates for SMEs: The Chancellor is to substantially cut business rates for small and medium-sized enterprises (SMEs), in a bid to reduce the impact of decreasing footfall and rising costs for high street retailers.

Annual investment allowance: The Chancellor announced a higher AIA of £1,000,000 for the two years beginning January 2019. He is also to introduce capital allowances at 2% per year on structures and buildings. Clearly the aim of these measures is to encourage capital investment. 

Capital gains tax: The Chancellor has decided that in future lettings relief will only be available where the owner is in shared occupation with the tenant. In addition, the final period of exemption for private residence relief will, in most cases, be reduced from the current 18 months to 9 months. These measures have the potential to increase home owners’ and landlords’ capital gains tax bills.

Many commentators had thought that the Chancellor may abolish Entrepreneurs Relief. Fortunately he has decided to retain this valuable capital gains tax relief. However, he has decided that the conditions for the relief will need to be satisfied for at least 2 years rather than the current 12 months.

IR35 : The off payroll working rules (known as IR35) will be reformed for the private sector so that they are in line with the public sector from April 2020. Only medium and large engagers will be affected.

Research and development: Something that will affect a number of Scott & Wilkinson clients is research and development claims being restricted to a multiple of the PAYE paid by the company, therefore penalising companies that do not have employees.

VAT: There was no change to the VAT registration threshold which will remain at £85,000 until 2022. 

Levy on apprenticeships: The Chancellor announced plans to cut the amount of apprenticeship levy contributions that small businesses pay from 10% to 5% with the objective of encouraging take up.

 If you have questions about these or any other changes announced in today’s budget, our team will be happy to help.