Phillip Hammond delivered his latest budget yesterday. Widely regarded as something of a damp squib, it had been heralded as the beginning of the end to austerity! Certainly, there were a number of headline tax cuts, that should benefit millions. But, with Brexit just around the corner will it be enough to see off the era of austerity?
Budget 2018 highlights
- Economic growth is forecast to be ‘resilient’. With forecasts for 2019 at 1.6pc, up from 1.3pc forecast in the Spring Statement.
- Borrowing this year will be £11.6bn lower than forecast in the Spring Statement.
- There will be an additional £500m for no-deal Brexit planning.
- There will be increased spending on the NHS (an extra £20.5bn a year in funding by 2023), social care (an additional £650m boost), defence (an additional £1bn), education (£400m in-year bonus for schools to buy “the little extras they need”) and infrastructure (an extra £420m immediately available to local authorities to tackle potholes, bridge repairs and other minor works).
- A new tax on plastic packaging which does not contain 30% recyclable material
- Forecast for borrowing to be £11.6bn lower in 2018-19 than forecast at the spring statement. The equivalent to 1.2% of GDP.
Budget 2018 impact on business
- New 2% digital services tax on UK revenues of big technology companies, from April 2020
- Profitable companies with global sales of more than £500m will be liable
- Annual investment allowance to be increased from £200,000 to £1m for two years
- Contribution of small companies to apprenticeship levy to be reduced from 10% to 5%
- Business rates bill for firms with a rateable value of £51,000 or less to be cut by third over two years
- Measure to benefit 90% of independent shops, pubs and restaurants, cutting bills by £8,000
- £900m in business rates relief for small businesses and £650m to rejuvenate High Streets.
Budget 2018 impact on individuals
- The personal allowance threshold, the rate at which people start paying income tax at 20%, will rise from £11,850 to £12,500 in April – a year earlier than planned
- The higher rate income tax threshold, the point at which people start paying tax at 40%, will rise from £46,350 to £50,000 in April
- National Living Wage increasing by 4.9%, from £7.83 to £8.21 an hour, from April 2019.
- Beer, cider and spirits duties will be frozen. A bottle of wine duty will rise by 8p
- All first-time buyers purchasing shared equity homes of up to £500,000 to be exempt from stamp duty
- £500m for the Housing Infrastructure Fund, designed to enable a further 650,000 homes to be built
- Work allowances for universal credit to be increased by £1.7bn
- 2.4 million working families with children to benefit by £630 a year.
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