Our newest partners Hammond Raggett & Company have pulled together an assessment of the November budget.
Delivered on a Monday afternoon instead of the traditional Wednesday, between key meetings in the Brexit negotiations and amidst turbulent times in Westminster, you could be forgiven for losing track of the 2018 Budget.
Key announcements
Many people were expecting tax rises, but Mr Hammond’s job was made easier in the lead up to the Budget by updated forecasts from the Office for Budget Responsibility showing borrowing was £13 billion lower than expected and with it followed the caption; ‘end to austerity’. But what does this mean?
One of the most high-profile announcements by Mr Hammond is a new digital services tax – dubbed the ‘Amazon tax’ by the media. Targeted at large companies, the tax has been set at 2% of revenue derived from UK users through the use of things such as search engines, social media platforms and online marketplaces. Many in business will welcome this first step in levelling the playing field.
The Chancellor also sought to win favour with larger-than-expected increases to the personal allowance and higher rate threshold. Originally a part of the Conservative manifesto, the increases have been brought forward by a year – from April 2019 the personal allowance will increase to £12,500 and the higher rate threshold will be raised to £50,000. In addition, the national minimum wage will rise to £8.21 an hour from April 2019 which is an increase of 4.9%.
On the spending front, the Chancellor has confirmed increases the NHS budget by £20.5 billion by 2024 and pledged £650 million to help fund social care over the next year. Additional spending on roads and the Armed Forces was also announced, along with help with business rates for smaller retail businesses.
But what about the nursery and education sectors, which ministers so regularly tell us are critical to the future success of this country?
For them, it was thin gruel. An extra £400 million for schools to enable them to afford “the little extras they need”, items which most of us would class as “the basics”, and nothing to address the long-term funding issues. And the nursery sector was ignored entirely. A sector already under mounting financial pressure, because of the way it is funded, will face further cost increases in the form of increases to the national minimum wage. Failing to include nurseries in the business rate relief scheme feels like an obvious opportunity has been missed.
On the positive side, nursery business owners will be pleased to know that entrepreneur’s relief (the ability to sell a qualifying stake in a business and pay just 10% tax on the proceeds), has been maintained, despite the rumours that it was to be significantly curtailed or even scrapped and that pension annual and lifetime allowances have been maintained.
For our full Budget Analysis click HERE