Will you be better or worse off because of today’s Budget? Our summary answers that question, please read on to find out.
The Chancellor brought forward an election pledge to increase both the Personal Allowance and Higher Rate tax band, affecting 32 million people. From April 2019, the Personal Allowance will increase to £12,500, while the higher rate tax threshold will be £50,000, rising from £11,850 and £46,351 respectively.
The National Living Wage will also increase to £8.21 from April 2019 from the current £7.83, representing a 4.9%, and significantly above inflation, increase.
Main residences will remain exempt from Capital Gains Tax (CGT), ensuring families that sell their home don’t face a tax from the sale of their property.
Furthermore, all shared equity purchases of up to £500,000 will be exempt from Stamp Duty.
Small businesses and self-employed
The threshold for VAT registration will remain unchanged for the next two years despite speculation that it would drop. The fact the current £85,000 turnover threshold remains in place will be a relief to many people who are self-employed or run small businesses.
Businesses occupying property with a rateable value of less than £51,000 will have their business rate cut by a third over the next two years. The amount businesses pay in rates has been a longstanding issue for many, particularly those in retail as the high street attempts to compete with online businesses. The changes will mean savings for 90% of shops, restaurants and cafes.
Finally, a £695 million initiative that will help small businesses to hire apprentices was also announced. Those firms taking on apprentices will have the amount they need to pay halved.
People paying into pensions
Despite concerns ahead of the Budget that there would be some changes to tax relief on pensions, no changes were announced in the speech. For those paying into a pension, it provides some level of certainty, at least for a further year.
There will be a new tax targeting digital businesses. The UK Digital Services Tax will target specific platform models and technology giants. It will only be paid by firms that generate £500 million in revenue globally and will come into effect in April 2020. Digital tech giants will be taxed 2% on the money they make from UK users.
Tax avoiding businesses
Once again, the Chancellor accounted that there would be a clampdown on large companies that avoid paying the correct level of tax. The Chancellor aims to raise £2 billion over the next five years by targeting tax avoidance and evasion.
If you want to discuss how you are affected by today’s Budget or have any questions, please contact us to speak to one of our finance professionals.