The Chancellor of the Exchequer, Philip Hammond, announced his ‘post-austerity’ Budget, which had a number of announcements for small business owners, from personal tax allowance to business rates.
The Budget was described by the Chancellor as being for ‘the strivers, the grafters and the carers.’
This was the final Budget before the UK leaves the EU and Hammond announced an additional £500 million for no-deal Brexit contingency preparations, suggesting that an emergency Budget could take place in Spring if a withdrawal agreement is not reached.
Annual Investment Allowance – the Annual Investment Allowance will increase to £1 million from 1 January 2019 to 31 December 2020 to help businesses to invest and grow. Also, from October 2018, businesses will be able to deduct 2% of the cost of any new non-residential structures and buildings off their profits before they pay tax.
Business rates – small retail businesses will see their business rates bills cut by a third for two years from April 2019, saving them £900 million. Local high streets will benefit from £675 million to improve transport links, re-develop empty shops as homes and offices and restore and re-use old and historic properties.
VAT registration – the threshold is to remain at £85,000 for the next two years.
R&D tax credit – from April 2020, the amount of payable R&D tax credit that a qualifying loss-making company can receive in any tax year will be limited to three times to company’s total PAYE and national insurance liability for that year. Any loss not surrendered can be carried forward and used against future profits.
Tax – digital tech giants will be taxed 2% on the revenues they earn which are linked to UK users from April 2020.
Entrepreneurs’ Relief – for disposals from 6th April 2019, a new measure increases the qualifying period in which conditions must be met from one year to two years.
IR35 rules extended – there is to be a reform of the off payroll working rules for the private sector to match the use of the rules in the public sector. The rules will be extended to large and medium sized businesses in the private sector from April 2020. Small organisations will be exempt.
Apprenticeship levy – from April, large businesses will be able to invest up to 25% of their apprenticeship levy to support apprentices in their supply chain. Some employers will pay half of what they currently pay for apprenticeship training – from 10% to 5%.
Personal Allowance – the tax-free Personal Allowance will rise to £12,500. The rise comes a year earlier than planned and will be maintained in 2020. This means a basic rate taxpayer will pay £1,205 less tax in 2019-20 than in 2010-11.
Higher Rate Threshold – the Higher Rate Threshold will increase from £46,350 to £50,000 in April 2019. This means that in 2019-20, there will be nearly 1 million fewer higher rate taxpayers than in 2015-16.
National Living Wage (NLW) – from April 2019 the National Living Wage will increase from £7.83 an hour to £8.21. This will benefit around 2.4 million workers, and is a £690 annual pay rise for a full-time worker.
Stamp Duty – relief is to be extended for all first-time buyers of shared ownership properties valued by to £500,000.
Capital Gains Main Residence Relief – the current 18-month exemption is to be shortened to 9 months, meaning a shorter period for people to move house and not be subject to capital gains tax. The government will also reform the main residence lettings relief from April 2020, so it will only apply when the owner is in shared occupancy with the tenant.
Universal Credit – £1.7 billion to increase work allowances in Universal Credit. Increases to work allowances will mean working parents and people with disabilities claiming Universal Credit will be £360 better off each year.
Fuel duty – for 2019/20, fuel duty will remain frozen for a ninth year.
Duty on beer, cider and spirits remains frozen.
Short-haul rates of Air Passenger Duty will not rise.
A number of investment initiatives were announced to deal with a range of issues: