10 key announcements from the Budget 2018

Fiscal Phil delivered a detailed Budget today, outlining where spending will be allocated in the year ahead.

The chancellor outlined the state of public finances before making an array of announcements, explaining that public borrowing is to be £11.6bn lower than forecast in the Spring Statement. The borrowing forecast is also set to fall year on year, reaching £19.8bn in 2023 and debt as a share of GDP to drop from 85.2% in 2016-17 to 74.1% in 2023-24.

Hammond promised: “An economy working not for the few, not even for the many, an economy working for everyone.”

1. Brexit

The Conservative government have allocated an extra £500m for Brexit preparations and Hammond announced that allocations for individual departments will be announced in the coming weeks.

There is an aim to prepare for every deal eventuality, and the chancellor promised next year’s Spring Statement could be upgraded to a full Budget if necessary.

2. Austerity

The Budget speech included a promise that the period of austerity since 2010 is finally going to end.

Hammond said: “Austerity is coming to an end but discipline will remain.”

Growth is forecast to rise from 1.3% this year to 1.6% in four years. Over three million more people are in work since 2010 and wages growth are at their highest in almost ten years.

3. IR35

IR35 is the UK’s anti-avoidance tax legislation which was put in place to tax disguised employment at a similar rate to employment. Disguised employment refers to when workers receive payments from clients through an intermediary, such as their own limited company, and the relationship with their client is such that if they had been paid directly they would be employees of the client.

The Budget announced that the same changes will now be applied to private sector organisations.

However this new policy will be introduced from April 2020 onwards and, for now, will only apply to medium and large businesses.

4. Personal allowance and jobs

The rate at which people will start paying income tax will rise from £11,800 to £12,500 in April next year. The changes came in a year earlier than anticipated.

Equally the higher rate income tax threshold will rise from £46,350 to £50,000 in the same month next year.

The current government have also pledged to increase start-up loans from 2021 and reduce small business contributions to the Apprenticeship Levy from 10% to 5%.

5. Digital Tech Tax

There will be a new Digital Technology Tax on UK revenues from the big tech companies like Google, Apple and Facebook.

This will extend to profitable companies with sales of more than £500m globally.

Hammond said: “We will ensure we get it right so UK remains best place to start and scale a tech business.”

6. Business rates

In a big announcement, the chancellor vowed business rates for companies with a rateable value of £51,000 or less will be reduced by a third over two years.

7. Productivity and technology

While not wanting to focus too much of The Budget on productivity after last year, cheers from his party led Hammond to announce a further £1.6bn in investments to support a new industrial strategy.

The commitment to infrastructure is striving to meet £38bn by 2023-24.

Hammond said the Conservatives will be “reinvigorating capitalism because [he] wants Britain to be one of the great winners of the technological revolution.”

8. Entrepreneurs relief

After much speculation around entrepreneur’s relief, Hammond announced this Budget would not be re-allocating funds elsewhere but that they will extend the minimum qualifying period to two years.

He said: I do not believe we can have sustainable public services unless we have a dynamic economy – I shall retain this.”

9. Universal Credit 

Work allowances for university credit will now be increased by £1.7bn, predicting to benefit 2.4m working families with children by £630 a year.

The chancellor promised his party will be “keeping taxes low while keeping debt down”.

10. Stamp duty and housing

Following the announcement of stamp duty relief for first time buyers in last year’s Budget, all first time buyers purchasing shared ownership homes worth up to £500,000 will now be exempt from stamp duty.

The government are further pledging £500m for the Housing Infrastructure Fund, aiming to build 650,000 more homes.