Opening his Autumn Budget for 2018, Chancellor Philip Hammond stated that the ‘era of austerity is finally coming to an end, but that discipline will remain’. He said that this Budget will ‘pave the way for a brighter future’ and that ‘decisions of the last 8 years were not driven by ideology, but by necessity’. He believes that we have ‘reached a turning point, a defining moment on a long, hard journey, but the focus will be resolutely on the challenges and opportunities that lie ahead’.
For our sector, the most significant point was mention of the roll out of off-payroll reforms into the private sector, which the Chancellor confirmed was his intention, but not until April 2020.
Other Salient points:
- Personal allowance, the rate at which people start paying income tax, to rise from £11,800 to £12,500 in April 2019.
- The higher rate income tax threshold to rise from £46,350 to £50,000 in April 2019.
- From April 2019, National Living Wage will rise to £8.21 per hour.
- VAT Registration Threshold: maintained at £85,000 for further two years.
- Apprenticeship levy: halve the employers’ co-investment rate for apprenticeship training to 5%.
- Corporation tax: maintained previous pledge of cutting to 19% and legislating for it to fall to 17% in 2020.
Remaining key points:
- 2018 growth forecast upgraded to 1.6% from 1.3% last year and 1.5% in March.
- Economy predicted to grow 1.4% in 2019, 1.4% in 2020, 1.5% in 2021 and 1.6% in 2022. These forecasts are up marginally for each year.
- Wages growth at its highest in nearly a decade.
- 800,000 more jobs by 2023.
- UK growth upgraded for next 2 years and then back to OBR estimates.
- Average annual real growth was -3% in 2010; -1% in 2015 and will be +1.2% in 2019.
- Public borrowing in 2018 to be £11.6bn lower than forecast in his Spring Statement in March, representing 1.2% of gross domestic product, (GDP) the total value of goods produced and services provided.
- Borrowing forecast to be £31.8bn in 2019, £26.7bn in 2020, £23.8bn in 2021, £20.8bn in 2022 and £19.8bn in 2023.
- Debt as share of GDP peaked at 85.2% in 2016-17, falling to 83.7% this year and to 74.1% by 2023-24.
- Average annual government spending to rise by 1.2% from 2019.
- Extra £500m towards preparations for leaving the EU.
- Spring Statement in March 2019 could be upgraded to full Budget if needed.
- A commemorative 50p coin to mark the UK’s departure from the EU.
Alcohol, tobacco and fuel
- Beer, cider and spirits duties to be frozen.
- Wine duty to rise in line with inflation.
- Tobacco duty will continue to rise by inflation plus 2%.
- Fuel duty to be frozen for ninth year in a row.
Stamp duty and housing
- All shared equity purchases of up to £500,000 to be exempt from stamp duty.
- £500m for the Housing Infrastructure Fund, designed to enable a further 650,000 homes to be built.
- From April 2020, lettings relief limited to properties where the owner is in shared occupancy with the tenant.
- New partnerships with housing associations in England to deliver 13,000 homes.
- Guarantees of up to £1bn for smaller house-builders.
Welfare and pensions
- Work allowances for universal credit to be increased by £1.7bn.
- 2.4 million working families with children to benefit by £630 a year.
- An extra £1bn to help welfare claimants transfer to new consolidated benefit.
- £650m of grant funding in 2019 for English authorities for social care.
Defence and security
- An extra £160m for counter-terrorism police for 2019/2020.
- An extra £1bn for remainder of 2018 and 2019 for armed forces, to boost cyber-capabilities and the UK’s new ‘Dreadnought’ nuclear submarine programme.
- £10m to Armed Forces Covenant Fund Trust for mental health care for veterans, to mark the centenary of World War One Armistice.
- £1.7m in Holocaust education programmes to mark the 75th anniversary of the liberation of Bergen-Belsen concentration camp, to education schoolchildren about the horrors of the Holocaust.
Business and digital
- From April 2020, extending changes to the way self-employment status is taxed (IR35), from the public sector to medium and large private companies.
- £1.6bn of new investment to support government’s industrial strategy for nuclear fusion and quantum computing.
- National Productivity Investment Fund to increase to £38bn by 2023.
- New digital services tax on UK revenues of big technology companies, from April 2020.
- Established tech giants will shoulder the burden rather than start-ups.
- Profitable companies with global sales of more than £500m will be eligible.
- £2bn more over next 5 years will be raised in plans to clamp down further on tax avoidance.
- Private finance initiative (PFI) contracts to be abolished in future.
- New centre of excellence to manage existing deals ‘in the taxpayer’s interest’.
- HMRC to be made a preferred creditor in business insolvencies.
- Annual investment allowance to be increased from £200,000 to £1m for two years.
- Contribution of small companies to apprenticeship levy 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 third over two years.
- Measure to benefit 90% of independent companies, cutting bill by £8,000.
- £900m in business rates relief for small businesses and £650m of co-funding to rejuvenate high streets.
- New mandatory business rates relief for all lavatories made available for public use, whether publicly or privately owned.
Education and health (England only)
- NHS is number 1 priority of British people as it celebrates its 70th anniversary.
- NHS will produce a 10-year plan on how services will be reformed and waste will be reduced: to be published shortly.
- Confirmation of an extra £20.5bn for the NHS over the next five years.
- A minimum extra £2bn a year for mental health services.
- New mental health crisis centre, providing support in every accident and emergency unit in the country.
- An extra £700m for councils, for care for the elderly and those with disabilities.
- £10m funding for air ambulances.
- A one-off £400m cash infusion to help schools buy ‘the little extras they need’, working out at £10K per primary and £50K per secondary school.
Transport, infrastructure and culture
- A £30bn package for local authorities to improve roads, including repairs to motorways, bridges and potholes (announced on 27th October).
- A 30% growth in infrastructure spending.
- Opening the use of e-passport gates at airports – currently available only to those from Europe – to those from the USA, Canada, New Zealand, Australia and Japan.
- Railcard for those aged 26-30 to be available by the end of this year.
- No change in duty rate for short haul flights.
Environment and energy
- A new tax on non-recycled plastic packaging.
- No tax on takeaway coffee cups but this will be reconsidered if the industry doesn’t make enough progress.
- £60m for planting trees in England.
- £10m to deal with abandoned waste sites.
- An additional £950m for the Scottish government, £550m for the Welsh government and £320m for a Northern Ireland Executive in the period to 2020-21.
- Increasing Transforming Cities Fund to £2.4bn.
- Investment of £12m over 3 years in cutting edge fisheries technologies and safety measures.
- New City and Growth deals for Belfast, north Wales and the Tay Cities area, which includes the cities of Dundee and Perth as well as Angus and the north part of Fife.
- £2m for Belfast to help recover from Primark fire.