Phillip Hammond has delivered the Budget and promises that the end of austerity took center stage along with some brighter forecasts. What did it all mean for the business owner though? We have looked through the information and here is a summary of the Budget that will affect businesses:
Business Rates Reform
It has been announced by Phillip Hammond that £1.5bn would be injected into the UK business rates system with high street retailers being the focus in an attempt to combat the threat posed by online shopping. Almost half a million high street businesses are claimed to having their business rates cut by one third through £900 million of immediate business rates relief.
Two examples made by HM Treasury are: A sheffield pub with a rateable value of £37,750 would save £6,178 a year and a Midlands newsagent with a rateable value of £14,250 would save £1,749.
Phillip Hammond announced that the current VAT threshold would stay the same at £85,000 until at least 2020.
New Enterprise Allowance
There were talks of the New Enterprise Allowance being axed before the Budget but it has been announced that the scheme will be extended as well as allowing tax deductable training opportunities for the self employed.
Personal Allowance and Minimum Wage
A year earlier than expected the personal allowance will be raised to £12,500 in April 2019, this was announced alongside raising the basic rate band to £50,000 and will be raised in line with inflation.
The national living wage (for those aged 25 and over) will be raised by 4.9% in April 2019 – rising to £8.23 from £7.83. All other brackets are expected to rise above inflation but their exact figures were not announced.
Capital Gains Tax: Letting Relief
From April 2020 the government will reform lettings relief so it can only apply when the owner of the property shares occupancy with the tenant. The final period of exemption is due to be reduced from 18 months to 9 months but these changes are subject to change pending consultations.
Annual Investment Allowance
In a bid to increase capital investment Phillip Hammond has decided to raise the Annual Investment Allowance from £200,000 to £1 million for 2 years – this will commence in January 2019.
Apprenticeship support has been increased for small businesses, this will reduce the contributions for smaller businesses from 10% to 5%. This is part of a £695 million package to support apprenticeships.
For the 9th year running fuel duty has been frozen, saving the average driver £1000 and van drivers £2500 a year.
Digital Service Tax
In an attempt to combat tech giants such as Google and Apple who benefit from digital sales, the government plan to implement a ‘Digital Service Tax’ so that they pay their fair share. This is subject to further consultation on the details. The government is also calling for a global digital service tax.
Just so You Know
Beer, cider and spirit duty has been frozen meaning you will save 1p on a pint of beer, 2p per pint of cider and 30p on a average bottle of spirit. However the tax on wine has been increased with inflation, starting in February 2019 expect to pay 7p more per bottle of wine and 9p more for sparkling wine.
R&D Tax Relief
Phillip Hammond is introducing a PAYE restriction to be re-introduced for SME Research and Development tax relief claims. This will not have any effect on R&D claims we have already made.
PFI abolished for future projects but current contracts will be honored.
£400 million extra cash to schools in England this year.
£1.7bn boost for Universal Credit work allowances plus an extra £1bn for claimants transferring onto the scheme.
New mental health crisis service as part of the extra £20.5 billion a year extra for NHS.
A new import tax on plastics that do not use 30% reused materials.
£1bn to go to the ministry defence.
£650m for councils for social care.
£160 million for counter terrorism.
First time buyers purchasing shared homes will be exempt from stamp duties up to houses worth £500,000 and this will be backdated to the last Budget.
26-30 rail card to be made permanent giving 1/3 of rail fares.
This years Budget is subject to change, even though it was delivered as a Budget that is prepared for Brexit many experts have labelled this Budget the ‘phony Budget’ and expect another Budget in 6 months time.