Chancellor of the Exchequer, Philip Hammond’s opening statement which was greeted by laughter in the House with the claim that it will “pave the way for a brighter future”.
With talk of the economy and Brexit being a daily event, the Autumn statement has never been more in the focus for business owners. With £20bn needing to be found for the NHS alone and government debt to be controlled, there will certainly be pain somewhere.
Whatever your political position, everyone can agree on one issue – the budget is definitely a challenge. Balancing promises made, gaining favour and being “positive” can be no easy feat.
Whilst it may be considered the most significant government publication of the year, we were already aware of most of the detail and indeed today has been mainly a confirmation of what we already knew and statistics showing achievements and optimism – from Hammond’s view at least.
Without political prejudice or comment (unlike Hammond’s humorous quips), here are the key points from the Budget on 29th October:
Income Tax Thresholds – The Conservative manifesto stated that the first £12,500 of earnings will be income tax-free by 2020-21 taking a stepped approach to get this level and that the higher rate tax band will be increased to £50,000. It was announced that these thresholds would be moved a year early and be in place by April 2019. A welcome treat for us all.
Digital Services Tax – A new UK digital services tax to be introduced on UK generated income for those companies with £500m plus global revenue. This is quite a radical move doing this as a stand-alone government, and Hammond commented that should there be a globally agreed solution it would be considered but that he would not wait to introduce this tax.
Business Rates – A fantastic 30% reduction in business rates to help our local high street. For the next two years, properties with a rate value of £51,000 or less will benefit from this reduction. This gives an annual saving of £8,000 pa.
Public Services Development – PFI will be abolished for future projects whilst existing contracts will be honoured, and managed through a newly created Centre of Excellence, focusing on healthcare PFI initially.
NHS – Confirmation of the additional £20bn announced on the NHS’s 70th birthday, with a commitment to target improvements in mental health services including a new crisis service in every A&E, more mental health ambulances, a 24-hour helpline and more safe havens in the community.
Universal Credit – Additional funding to support the transition to Universal Credit and an increase of £1,000pa once fully rolled out.
VAT – the threshold of VAT remains as is for a further two years. Startups – start-up loans and new enterprise allowance to be extended to 2021
Apprenticeships – the apprenticeship levy to be reduced from 10% to 5% for smaller businesses taking on apprentices.
And for significant announcements that was pretty much it, leaving the studios of experts and reporters desperately trying to find something to say of significance.
Other announcements included:
£400m one-off capital payment directly to schools. This equates to £10,000 for a primary and £50,000 to secondary schools.
Duty freeze on fuel (for the ninth year) and alcohol (to protect the local pub). Although slightly worrying if a wine drinker as only mentioned cider, beer and spirits. Tobacco duty to continue to rise by inflation plus 2%
National Living Wage to rise by 4.9% to £8.21 – an increase of £690 pa. It was noted that the proportion of low paid jobs at its lowest since 1997.
Further investment for 650,000 new homes and relaxation of planning controls to allow conversion of commercial properties into residential
New national rail card for people age 26-30 reducing the cost of rail travel to be introduced
Tax on certain plastic packaging manufacturing and importing. (No tax on the use of plastic cups to yet be introduced with Hammond commenting that he will monitor the impact of the private retailers introducing such a “tax” before taking action).
£10million to deal with abandoned waste.
Local councils will have more resources and controls to help elderly, children in care and disabled through a £650 million grant funding for social care in 2019-2020.
£10million investment to Air ambulance services
£420 million immediately to local highway authorities for potholes, bridge repairs and highway repairs.
Private residence relief for capital gains tax to be altered to only apply if the owner is resident in the property alongside the tenant.
April 2020 large and medium-sized businesses must abide by off-payroll working rules
Despite speculation in the press over the past few weeks, no details were verbally given on national insurance, pension contributions, buy-to-let tax relief, the industrial strategy although comments were made that details would be published.
And in true British humour style, we mustn’t forget the announcement of the introduction of a mandatory business rate relief on public toilets. Hammond giggled at his own jokes and puns, which just kept coming and coming, to be received by a groaning House. Probably the most memorable part of the speech except for the omission of the word Brexit.
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