Budget 2018 – whats happened
Earlier this week, Philip Hammond laid out his plans for the UK economy as he delivered this Autumn Budget.
The key changes announced in this week’s Budget include:
- Raises personal allowance to £12,500 from April 2019
- Raises the higher rate to £50,000 from April 2019
- Extra £1bn for Universal Credit over five years
- UK digital services tax to be introduced on firms that generate £500m in revenue
- Business rates to be cut by one third for firms with a rateable value of less than £50,000
- Fuel duty to be frozen again for a ninth year in succession
- Duty on beer, cider and spirits – but not wine – frozen for a year
- Work allowances in Universal Credit being increased by £1,000
- £500m for housing infrastructure fund
- £25bn in real terms increase for the NHS
- An extra £1bn for the MoD for this year and next
- An extra £160m on Counter-Terrorism funding in 2019/20.
- £10m of funding for air ambulance services
- £400m fund to help schools buy the extras that they need
- £420m being made available immediately to help council tackle potholes
- £695m initiative to help small firms hire apprentices
- Has frozen the UK’s VAT threshold for a further two years, ending speculation there would be a drastic cut.
- Has increased the annual investment allowance (AIA) from £200,000 to £1m for the next two years.
- The corporate tax rate reduction to 17% from April 2020 has survived
- Some significant changes to the penalty regime for late filing of tax returns are in the pipeline. The new rules aim not to charge a cash penalty for occasional mistakes. It will do this by bringing in a “points” system (similar to speeding penalties for motorists).
Taxation of digital companies
From April 2020, a new 2% digital service tax will be introduced on sales made by large, established digital services businesses. It was rumoured that this new tax could directly impact small digital services businesses; however, it only applies to groups generating over £500 million a year globally from these services.
IR35 rules are going to change in the private sector
From April 2020, however, if the contractor is working for a “medium or large” business, it will be up to that business to assess whether the contractor they are using are caught under IR35 or not.
The Budget report did not define what a ‘medium or large’ business is, Whether the ‘number of employees’ figure highlighted in these thresholds will also include affected contractors has yet to be defined
HMRC to be made a preferred creditor in insolvencies
From 6 April 2020, when a business enters insolvency, HMRC will become a preferred creditor for certain taxes, including VAT, PAYE Income Tax, employee NICs, and Construction Industry Scheme deductions. Direct taxes on the company’s profit such as corporation tax and employer NICs remain unchanged.
No mention of Making Tax Digital (MTD)
There was no mention of MTD in either the speech or the full report, so we have to assume that the current plans are going ahead, with MTD for VAT due to be introduced in April 2019.
BTCSoftware
We will be following the developments from the Chancellor’s Autumn Budget as they emerge and our software and app will adapt to reflect new tax rates and changes. We will ensure the accountants and tax advisers we support have all the tools they need to help their clients comply with the latest changes and regulations.
