“More Maths for Everyone!” One of the headlines from today’s budget that we’re fairly sure won’t appeal to most of our clients!
In the first Autumn budget since Philip Hammond announced an overhaul to the budget system, we found out a few interesting tax measures, but there wasn’t a lot in there that was specific to tax.
Hammond set out how the country is at a critical juncture in Brexit negotiations, with a future full of change, new challenges and new opportunities. The plan is to seize these challenges, and gain clarity as early as possible to allow businesses to plan and invest. The government has committed to setting aside at least £3bn over the next two years to prepare the country for any possible outcome of these negotiations.
Britain is at the forefront of a technological revolution, across factory floors, universities and business parks across the nation. A new tech business is founded in Britain every 60 minutes; the government wants to increase this to one every 30 minutes and has therefore pledged to invest in innovative concepts such as 5G internet, driverless cars, artificial intelligence and fibre broadband. This is great news for companies undertaking research and development, as well as the news that the main rate of relief is increasing to 12%.
The government has committed to environmentally driven policies; targeting diesel cars and consulting on how to tackle plastic pollution using tax. A new clean air fund will also be given £220m to support the implementation of local air quality plans.
Given the concentration of economic strength in London, the government wants to back the midlands engine and the northern powerhouse. Devolution of North of the Tyne is in place and £337m has been committed to replacing the rolling stock on the Tyne and Wear Metro – good news for our commuters. £123m will also be invested in the Redcar steelworks site.
A few changes are being made to universal credit to make it more accessible and to help people more quickly. The NHS has commitment for additional funding and a promise was made to always back it. Housing will also receive significant investment to aid the housing crisis currently plaguing the contry.
Despite all this positivity, growth forecasts been significantly downgraded in the run up to 2021, and in an interesting turn of phrase from Phil, “finally our debt is peaking”. 1.4m people remain out of work but forecasts suggest that 600k more people will be in work by 2022. Brexit negotiations will continue and we will be watching developments with interest.
A round up of the key tax/business changes are as follows:
- National living wage will increase from £7.50 an hour to £7.83 an hour from April 2018 (minimum wage will also increase for younger workers).
- The personal allowance will increase to £11,850 from April, with the rate at which you start to pay 40% tax will increase to £46,350
- Indexation allowance for limited companies will be abolished from January 2018 – which could mean capital gains tax hits for those with old assets that have appreciated significantly in value.
- The VAT threshold will remain at £85,000 for two years and will not be reduced.
- Stamp Duty will be abolished for first time buyers paying under £300,000, and will be exempt on the first £300,000 of a purchase under £500,000.
No major changes were announced but the devil may be in the detail as the documents are released in the coming days. If you have any questions or concerns about the budget – get in touch!