The Chancellor of the Exchequer, Phillip Hammond, recently delivered his third, and last pre-Brexit budget to parliament at the end of the October. It was aimed at hard-working families hoping to achieve a “brighter future”, and building a stronger economy. What did the Chancellor have to say about key issues that directly affect you? Read on for the highlights.
This does not constitute advice and advice should be sought in all instances before acting on it.
In the Budget there were some concessions that show the government is beginning to relax their staunch fiscal stance, but Hammond reiterated that while they might no longer be as strict on policies as they have been, everyone should still practise discipline.
Tax Thresholds/Allowances
A key detail in the address was that the higher rate tax threshold will be increasing to £50,000 from April 2019. This will reduce the amount of higher rate tax paid and will even push some into the basic rate band.
Based on an additional £3,650 salary being taxed at 20%, instead of 40%, individuals will save around £730 on their Income Tax bill. With the additional £130 personal allowance, you could save a total of £860.
Potentially, this change has the power to impact pension savings because of the tax relief structure currently in place. Individuals receive relief based on their highest marginal Income tax rate (20%, 40%, or 45%), so if they’ve been knocked down into the basic rate band, their relief will be halved which means less money being contributed into their pension.
National Insurance (NI) thresholds will also be affected – rising in line with inflation so that those earning between £46,350 and £50,000 will have 12% NI to pay.
Property Issues
Some good news for house hunters – all shared equity purchases up to £500,000 will be exempt from Stamp Duty Land Tax (SDLT). The government has also prioritised housing. In the hopes of building another 650,000 homes, they are allocating £500m for the Housing Infrastructure Fund, guaranteeing up to £1bn for smaller house builders, and have set up partnerships with housing associations to make 13,000 homes available.
Business Rates
Hammond also discussed off-payroll working, something that will surely impact many businesses that employ contractors. The annual investment allowance will be temporarily increased to a million pounds for two years and entrepreneurial relief will shift to target shareholders with a 5% stake in profits and assets.
Other highlights for businesses include:
- 2% Digital Services Tax on the revenues of certain digital businesses to ensure that the amount of tax paid in the UK is reflective of the value they derive from their UK users
- VAT threshold frozen at £85,000 – reconfirmed for two years
- Apprenticeship levy contribution for small companies to be reduced from 10% to 5%
- Business rates bill for companies with a rateable value of £51,000 or less to be cut by a third over two years (a saving of 90% for independent companies)
- £900m in business rates relief for small businesses and £650m to rejuvenate high streets
Develop your financial plan before Brexit
The Autumn Budget 2018 summary has an obvious effect on many financial aspects that dental and medical professionals care about – such as tax thresholds and allowances, SDLT and property issues, and business rates.
The areas of concern, including pensions, savings, and estate planning, remain intact. If you’re concerned about how any of these changes (or lack thereof) will affect you or your business, and want to learn how to enact change before Brexit takes place next year, we can help you develop a plan of action to keep your practice on track, so get in touch with us now.
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