Income tax payers
A year earlier than planned, the Chancellor increased the tax-free personal allowance and the higher-rate tax threshold. These measures in effect amount to a tax cut because taxpayers will pay less income tax over the course of a year as a result.
The personal allowance will rise to £12,500 on 06 April 2019 while the threshold for the higher rate of income tax will increase to £50,000. The thresholds will thereafter increase in line with inflation. Basic-rate taxpayers will typically be £130 a year better off.
Fuel duty was frozen for a further year. The Chancellor said a typical driver would have saved £1,000 as a result of the nine-year freeze. He also announced the largest ever roads investment package, confirming just under £30 billion would be used to upgrade the UK’s roads. Alongside building new roads, the money will be used to fix and upgrade existing routes.
Young rail travellers
A new 26-30 railcard will be introduced by the end of 2018, offering a one-third discount (subject to a minimum £12 fare in the morning peak) to around 4.4 million people aged 26-30 in England, Scotland and Wales.
Air passenger duty for short-haul flights will be frozen at 2012 levels, benefiting 80% of air passengers. Long-haul rates will increase in line with the Retail Price Index. The rates for long-haul economy will increase by £2 and the rates for those travelling in premium economy, business and first class will increase by £4. Those travelling long-haul by private jets will see the rate increase by £13.
Beer, cider and spirit drinkers
Duties on these drinks are to be frozen.
The tax relief that applies to those who let out homes they previously lived in is to be restricted. From April 2020 "lettings relief" will apply only in circumstances where the owner of the property is in shared occupancy with the tenant. The final exemption period will also be reduced from 18 to nine months.
The national living wage will rise by 4.9pc to £8.21 per hour.
The existing stamp duty exemption for first-time buyers will be extended to buyers of shared-ownership properties worth up to £500,000. This is retrospective, so those who have bought such a property since the last Budget will be able to claim the exemption. A further £500 million is also being made available for the Housing Infrastructure Fund, to help build 650,000 homes.
Over the past decade Britain’s high street retailers have seen the rise of e-commerce, among other headwinds, decrease sales and footfall.
In a bid to reverse this trend, the chancellor announced that just under half a million small retailers will be subject to business rates relief.
Despite speculation that the Chancellor would tinker with pension tax relief, a better-than-expected revenue windfall has allowed him to leave it untouched… for now! Pundits believe this reprieve will only be temporary.
Also, the Government will press ahead with legislation to end pensions cold calling in a bid to tackle fraudsters.
A new regime for the taxation of self-employed contractors is to be extended to the private sector, although not until April 2020. Those who work for small private sector organisations will not be affected by the changes to the rules, known as "IR35", as only large and medium-sized businesses will be brought into the net.
Wine drinkers and smokers
Duty on wine is not being frozen and inflation-linked increases will apply. It will rise by 8p a bottle on 01 February 2019 and the cost of a packet of 20 cigarettes increased immediately after the Budget yesterday by 33p! Tobacco duty will continue to rise by inflation plus 2%.
Big tech companies
In the absence of any international agreement, the Chancellor said the UK would push ahead with its own tax on technology giants deemed to be paying less than their fair share of revenue.
The tax will only target large established tech giants with global revenues of at least £500 million and is expected to rise around £400 million per year for the government.
The tax should not be felt by consumers, although there is always the possibility that tech companies will move to pass on the extra taxes they need to pay to consumers in the form of levying higher prices!
When someone earns more than £100,000 of income, they start to lose their personal allowance by £1 for every £2 of income they earn over this threshold. This creates an effective rate of tax of 60%. The increase in the personal allowance means that the 60 % effective rate of tax remains in effect for longer – between £100,000 and £125,000.
Please note that this information is based on our understanding of measures announced by the Chancellor of the Exchequer during his Budget Speech on 29 October 2018. These measures may be subject to change. Independent confirmation should be obtained before acting or refraining from acting upon the information given. Brunsdon is not responsible for the content of third party web sites.