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Budget 2018: Summary

30th October 2018

By Esmée Hardwick-Slack

 Budget 2018: Summary

 

Philip Hammond delivered his third Budget as Chancellor on October 29th, 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

 

Personal taxation & wages

  • 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

 

Housing

  • 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

 

Duties

  • 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

 

Welfare & 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 the new consolidated benefit

 

Economy

  • 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 Finances

  • 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

 

Brexit

  • Extra £500m for preparations for leaving EU
  • Spring statement next March could be upgraded to full Budget if needed
  • A commemorative 50p coin to mark the UK’s departure for the EU

 

Defence & security

  • 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 75th anniversary of the liberation of Bergen-Belsen concentration camp, in Northern Germany

 

Education & health

  • 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

 

Transport

  • 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

 

Environment

  • 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:

Budget 2018: Predictions

No-deal Brexit would require new Budget

New 50p to mark Brexit

 

 

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