Chancellor Philip Hammond delivered his latest Budget on 29 October. He boldly confirmed that the period of austerity imposed by his predecessor would come to an end. Earlier than usual, and despite the uncertainty surrounding the UK’s exit from the EU, the budget announced several changes to please individuals and businesses alike.
Key measures announced for businesses:
- Corporation tax will remain at 19% for the 2019/20 tax year. The intention of the Treasury for this to be reduced to 17% in 2020/21 was reiterated.
- The annual investment allowance will be temporarily increased from £200,000 to £1 million for two years. This will be from January 2019.
- Subject to consultation, from 1 April 2020 the amount of payable research and development (R&D) credit that a loss-making company receive in a tax year will be restricted to three time the company’s PAYE and national insurance liability for that year.
- Business rates are set to be reduced by a third for retail companies with a rateable value below £51,000 for two years from April 2019.
- The government is to introduce a digital services tax from April 2020. This will be levied at a rate of 2% upon digital businesses that generate £500 million per annum from specific business activities, including search engines and social media.
Key measures announced for individuals:
- The personal allowance will increase to £12,500 from 6 April 2019 and will remain at this level for the 2020/21 tax year.
- Similarly, the lifetime allowance for pensions will increase form £1.03 million to £1.055 million for the 2019/20 tax year.
- Whilst the ISA annual subscription will remain frozen at £20,000, those looking to save for the younger generation will benefit from an increase in the junior ISA annual subscription from £4,260 to £4,368. This comes into effect from 6 April 2019.
- The national living wage will increase by 4.9% from £7.83 per hour to £8.21 per hour.
- The capital gains annual allowance is to be increased to £12,000.
- Those focused on estate planning will be encouraged by the increase in the residence nil-rate band, which will rise to £150,000 from April 2019, and to £175,000 from April 2020.
- The stamp-duty relief for first-time buyers was extended to qualifying shared ownership properties.
- The VAT registration threshold was frozen at £85,000 until 2022.
- The government announced several measures to assist in reducing the administrative burdens on charities. This included increasing the upper limit of trading charities can carry out without incurring a tax liability.
- Following the royal assent of Finance Bill 2019/20, directors and other persons involved in tax avoidance, evasion and other unethical practices will be jointly liable for company tax liabilities.
For more details please download our Autumn Budget summary report.
The way in which tax charges (or tax relief, as appropriate) are applied depends upon individual circumstances and may be subject to change in the future. The information in this report is based upon our understanding of the Chancellor’s Autumn Budget 2018, in respect of which specific implementation details may change when the final legislation and supporting documentation are published. This document is solely for information purposes and nothing in this document is intended to constitute advice or a recommendation. You should not make any investment decisions based upon its content. ISA and pensions eligibility depend on personal circumstances. The value of investments can fall as well as rise and you may not get back the full amount you originally invested. Whilst considerable care has been taken to ensure that the information contained within this document is accurate and up-to-date, no warranty is given as to the accuracy or completeness of any information. All tax tables include numbers, rates and allowances only. None of the usual qualifying notes are included in this report.