Budget 2018 | What you need to know

Budget 2018

A commentary on the Chancellor’s Autumn Budget 2018 by Raffingers Tax Partner Neill Staff.

Read the key announcements here.

Philip Hammond presented his second Autumn Budget “for hard working families”, heralding the coming to an end of austerity. The Chancellor highlighted better than expected GDP growth for the UK, but despite the many positives to come out of his statement, there was little encouragement for small businesses. What with the uncertainty of Brexit, and the importance that small to medium-sized businesses (SMEs) play within the wider economic picture for the UK, I would have hoped to see additional measures to support growth.

The Chancellor did increase the Annual Investment Allowance to £1,000,000 for the two years beginning January 2019 with the intention of encouraging capital investment. He also froze the VAT registration threshold as was widely expected. He has, however, introduced a restriction to Entrepreneurs Relief where the ownership period has been extended from 12 months to two years (transitional rules will apply where the claimant’s business ceased before 30 October 2018). There is also a restriction for refunds arising from research and development claims where the refund will be restricted to the PAYE paid by the company. The intention is to restrict the benefit of R&D claims by companies that do not have employees.

Whilst the budget is not by any means bad news for SME businesses, it is not inspirational either. As a forward note, consultants and sole traders working in the private sector through a personal service company should also be aware that IR35 rules could apply to them from April 2020 if they work for a medium to large-sized business.

The changes to personal taxation include the Conservatives’ manifesto pledge to increase personal allowances to £12,500 and the higher rate threshold to £50,000 will be implemented from April 2019, which is one year earlier than proposed. For personal investors in the property market there are changes to Main Residence Relief where the final qualifying period of ownership will be reduced from 18 months to nine months.

An overview of all of the key changes announced can be viewed here.

For further information on any of the points announced at the Budget 2018, contact Neill Staff at neill.staff@raffingers.co.uk