On 29 October 2018, Chancellor Philip Hammond gave what is expected to be the last Budget speech before the UK is scheduled to leave the EU.
To save you the trouble of searching through pages of documents to find out what’s relevant to you, we’ve taken a closer look at each of the main announcements made on the day.
With the Federation of Small Businesses hailing it as “the most small-business-friendly Budget that this Chancellor has delivered”, there’s a lot to take away from Budget 2018 as a business owner.
As part of a package of measures to support the high street, retail businesses with a rateable value below £51,000 will see their business rates reduced by a third for two years from April 2019.
Despite speculation that it might change, the VAT-registration threshold was frozen for an additional two years, so it will remain at £85,000 until April 2022.
The Government may look at introducing a ‘smoothing mechanism’ to gradually introduce businesses to VAT, but this won’t be examined until the terms of the UK’s exit from the EU are clear.
Businesses investing in plant and machinery could benefit from a temporary increase to the annual investment allowance from £200,000 to £1 million. This will remain in place until 31 December 2020.
Then there’s the employment allowance, whichwill be reformed in April 2020 so it is only available to employers with a national insurance contributions bill below £100,000 in their previous tax year.
This may not be good news for some medium-sized or large businesses, but the Government says around 99% of micro-businesses and 93% of small businesses will still be able to claim it.
In one of the more surprising announcements of the Budget, the Chancellor announced that the personal allowance would increase to £12,500 and the higher-rate threshold to £50,000 from April 2019 – a year earlier than planned.
For those whose income falls below one of these thresholds, this effectively means an income tax cut.
Existing relief on stamp duty for first-time buyers was also extended to shared ownership properties, so more buyers may be able to benefit.
Fuel duty was frozen for 2019/20, along with alcohol duties on spirits, beer and cider.
While this Budget contained few major announcements for buy-to-let landlords, it did introduce a couple of tax changes that could add to costs for some.
This included a restriction to lettings relief from April 2020, so that it only applies where the property owner shares occupancy with the tenant.
The final period exemption for private residence relief will also be reduced from 18 months to 9 months.
It came as no surprise, but the confirmation that IR35 rules will be extended to the private sector from April 2020 provoked controversy among contractor groups.
The legislation, also known as off-payroll working rules, is intended to prevent people ‘disguising’ their employment to avoid paying extra tax, by working through their own company.
However, some contractors are concerned the rules could unfairly affect people who are genuinely self-employed, as well as putting an administrative burden on the businesses that hire them.
Smaller businesses will be exempt from the reformed rules, while medium and large businesses will receive support from HMRC.
If you want to know more about how these changes could affect you, or about the other measures announced in the Budget, don’t hesitate to get in touch.