Blog

Budget 2018: Summary

—

—

Oct 30, 2018

By Esmée Hardwick-Slack

Philip Hammond delivered his third Budget as Chancellor on October 29^th, announcing the governments planned spending over the next 12 months.

Here are the key points from the announcement:

Business & digital

New 2% digital service tax on UK revenue of large tech companies, from April 2020
Profitable companies with global sales of more than £500m will be liable
Small retail businesses in England will see business rates reduced by a third
The annual investment allowance is to rise five-fold from £200,000 to £1 million for two years
Reforms to individuals working under IR35 are to be extended to the private sector from April 2020
New 100% mandatory business rates relief for all lavatories made available for public use
£900m business rates relief for small businesses and £650m to rejuvenate High Streets
Measure to benefit 90% of independent shops, pubs and restaurants, cutting bills by £8,000
Contribution of small companies to apprenticeship levy to be reduced from 10% to 5%
New centre of excellence to manage existing deals “in tax payer’s interest.”
Private finance initiative (PFI) contracts to be abolished in future

The personal allowance threshold (the rate at which people start paying income tax at 20%) is to rise to £12,500 in April – after which the rate will rise in line with inflation
The higher-rate income tax threshold (the rate at which people start paying tax at 40%) to rise from £46,350 up to £50,000 in April – after which the rate will rise in line with inflation
A 4.9% increase will see the national living wage set at £8.21 an hour for over-25s, from April 2019

Stamp duty land tax abolished for first-time buyers of shared-ownership homes worth up to £500,000
£500m for the Housing infrastructure Fund to enable 650,000 homes to be built
Letting 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

Beer, cider and spirits duties to remain unchanged for 2019/20
Cost of a bottle of wine duty to rise by inflation plus 2%, in February 2019
A packet of 20 cigarettes to go up by 33p
A ten gram pack of cigars to go up by 17p
Fuel duty to be frozen for ninth year in a row
Remote Gaming Duty to increase by 21% for online gambling on “games of chance” from 2019

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 the new consolidated benefit

Chancellor said the era of austerity is “finally coming to an end.”
2018 growth forecast downgraded to 1.3% from 1.5% in March
The forecast for 2019 raised from 1.3% to 1.6% and annual forecasts raised to 1.4%, 1.4%, 1.5% and 1.6% in 2020, 2021, 2022 and 2023 respectively.
3.3 million more people in work since 2010 and 800,000 more jobs forecast by 2022
Wages growth at its highest in nearly a decade

Public borrowing in 2018 to be £11.6bn lower than forecast in March, representing 1.2% of GDP, the total value of goods and services.
Borrowing as a share of GDP to rise to 1.4% next year
Borrowing to total £31.8bn, £26.7bn, £23.8bn and £19.8bn in next five years.
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.
1.2% annual average growth in departmental spending promised

An extra £160m for counter-terrorism police
An extra £1bn for armed forces, for cyber-capabilities and the UK’s nuclear submarine programme.
£10m for mental health care for veterans, to mark the centenary of the Armistice which brought WWI to an end
£1m to fund school trips to WWI Battlefields
£1.7m in Holocaust education programmes to mark the 75^th anniversary of the liberation of Bergen-Belsen concentration camp, in Northern Germany

Confirmation of an extra £20.5bn for the NHS over the next five years
An extra £2bn a year for mental health services
New mental health crisis centres to provide support in every accident and emergency unit in the country
More mental health ambulances and a 24-hour mental health crisis hotline
An extra £700m for councils to care for the elderly and those with disabilities
£10m for air ambulances
A one-off £400m “bonus” to help schools buy “the little extras they need” this year
Funding for 10 University Enterprise Zones

A £30bn package for England’s roads, including repairs to motorways and potholes
A 30% growth in infrastructure spending
Opening the use of e-passport gates at airports – currently available to people from Europe – to those from the USA, Canada, New Zealand, Australia and Japan
Air Passenger Duty to be indexed in line with inflation

A new tax on plastic packaging which does not contain 30% recyclable material
No tax on takeaway coffee cups, but to be reconsidered if the industry doesn’t make enough progress
£60m for planting trees in England
£10m to deal with abandoned waste sites

Let us know your thoughts on the 2018 Budget in the comments or join the discussion on our Twitter.

Related Articles: