The future plans for the UK economy were mapped out on Monday when Phillip Hammond delivered his Autumn Budget.
At over an hour and a quarter it was Hammond’s longest Budget speech, so we’ve listed the key points you need to know below:
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
The introduction of a new 2% digital service tax on sales made by large, established digital services businesses will come into play in April 2020. This only applies to groups generating over £500 million a year globally from these services, so the likes of Google and Facebook will be affected by this change.
IR35 rules are going to change in the private sector
Also from April 2022, if a 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. What a ‘medium or large’ business in this case consists of is still to be confirmed, along with whether the ‘number of employees’ figure highlighted in these thresholds will also include affected contractors.
HMRC to be made a preferred creditor in insolvencies
Taxes including VAT, PAYE Income Tax, employee NICs, and Construction Industry Scheme deductions when a business enters insolvency will see HMRC will become a preferred creditor for from 6 April 2020. Direct taxes on the company’s profit such as corporation tax and employer NICs remain unchanged.
No mention of Making Tax Digital (MTD)
With MTD for VAT due to be introduced in April 2019, we can assume this is still going ahead as there was surprisingly no mention of Making Tax Digital (MTD) in either Hammond’s speech or the full report.