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Fiscal Phil sets out first steps to end austerity

Monday 29 October 2018

The Chancellor, Phillip Hammond, proceeded to announce the details of the 2018 Autumn Budget earlier this afternoon (29 October) with a focus on bringing an end to the current state of austerity. Unlike recent budgets, the Chancellor has put forward a number of changes which will likely make a significant difference to the British public, announcing significant new money for the NHS, defence and infrastructure.

The importance of technology to the Thames Valley means that the region should benefit from the announcement that £1.6 billion has been allocated to strengthen the UK’s global leadership in science and innovation.

There are also incentives for businesses to invest - with a two year increase to the annual investment allowance [£1,000,000 from £200,000] and the re-introduction of capital allowances for spending on commercial properties. Small businesses also benefit from an additional £900m of business rates relief – with £650m targeted to rejuvenate the High Street.

“Perhaps one of the biggest losers will prove to be Global Tech Giants, with global revenues exceeding £500m, as they will be subject to the new UK Digital Services Tax,” said Sharon Bedford, Head of Business Tax. “This announcement proved to be quite the surprise as Britain is going forward with this policy without the support of other countries.

“Of course, the elephant in the room was Brexit and with negotiations continuing the Chancellor could not address this with any certainty. However, he did raise the possibility of an additional Spring Budget if this proves necessary.”

From a personal tax point of view there is good news again this year for first time buyers; those who are looking to purchase a shared ownership property, up to the price of £500,000 will no longer have to pay Stamp Duty Land Tax. The Chancellor confirmed that this relief will be retrospective so those who have already purchased will not lose out.

“There were some changes to capital gains tax affecting individuals who sell their main residence without always having lived in it, and to the qualifying conditions for Entrepreneur’s Relief but no major announcements to ‘scare the horses,” says Stephen Barratt, Private Client Tax Partner. "It was also good to see that the promised personal tax allowance increase has been brought forward a year to April 2019."

There was also good news for low paid individuals who stand to benefit greatly from the new legislation, with £2.7bn being allocated to assist with the transition to Universal Credit and an above inflation increase in the National Living Wage.

Winners:

  • HMRC, who will become a preferred creditor in insolvency
  • Small retailers, benefiting from business rate reductions
  • NHS
  • Defence, including Ex-Service men and women
  • First time buyers in shared ownership properties
  • Low paid individuals

Losers:

  • Global Tech Giants
  • Tax avoiders
  • Smokers
  • Wine and White Cider Drinkers
  • Plastic manufacturers
  • PFI contractors

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