Budget 2018: winners and losers
5th November 2018
Chancellor Philip Hammond opened his cheque book in Budget 2018, possibly due to another Budget being in the pipeline in the event of no-deal Brexit.
Spreadsheet Phil’s main headline-grabbing measure was to reveal changes to the thresholds at which we all pay income tax, bringing a Tory manifesto pledge forward by a year.
Personal allowance and higher-rate threshold
The tax-free personal allowance is to increase from £11,850 to £12,500 for 2019/20, while the higher-rate threshold is to rise to £50,000 from 6 April 2019.
That amounts to a tax cut for many individuals who will pay less income tax over the next two years, as these thresholds will remain in place for 2020/21.
However, a measure to raise the upper profits and upper earnings limit for employees’ national insurance contributions in line with the increase to the higher-rate threshold means the 20% tax cut may seem more like 10%.
With Brexit looming large, speculation had mounted that the Chancellor could announce plans to reduce the VAT-registration threshold for 2020/21.
Hammond, however, decided to freeze the existing VAT-registration threshold at £85,000 until April 2022 to provide stability for business owners.
Making Tax Digital
No news is good news as far as Making Tax Digital (MTD) is confirmed, as ‘Fiscal Phil’ remained tight-lipped on rolling out digital tax reporting for individuals.
The silence also provides further clarity, if any was needed, that VAT-registered businesses are on course to begin using MTD from 1 April 2019.
Business rates partially lowered
Many independent shops, cafes, and pubs with rateable values below £51,000 a year are celebrating after business rates were slashed by a third.
This applies for two years from April 2019, subject to state aid limits, and by the Government’s own estimate stands to benefit up to 90% of small retailers in the UK.
Landlords and lettings relief
Landlords who rent out their former house were rocked in Budget 2018, following Hammond’s intention to reform lettings relief.
From April 2020, the relief is only available to property owners who shared their home with a tenant or lodger.
The relief is applied to reduce capital gains tax on the sale of a property a taxpayer lived in, but has since been rented out.
Get in touch
If you have questions about Budget 2018, talk to us on 0117 973 3377 or email email@example.com to speak to an adviser.
Alternatively, you can read our Budget 2018 report in full.