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2018 Budget highlights
Philip Hammond delivered his 2018 Budget on October 29 – the first to be held on a Monday since 1962 when the Chancellor of the Exchequer was Selwyn Lloyd.
Mr Hammond joked that this was to avoid the inevitable “anguished wailing” and “Hammo House of Horrors” headlines if he had delivered the Budget this Wednesday on Halloween.
In his last Budget before Brexit, the Chancellor said that the era of austerity is “finally coming to an end”. However, he had previously warned that an emergency Budget will be needed if Britain leaves the EU in March without a deal and he hinted in his speech to Parliament that another statement could take place in the Spring “if the economic or fiscal outlook changes materially in-year”.
Here are the main highlights that could have an impact upon your financial wealth planning.
The Chancellor announced the income tax personal allowance threshold, the rate at which people start paying income tax at 20%, will rise to £12,500.
The higher rate threshold, the point at which people start paying tax at 40%, will rise to £50,000 from April 2019.
Both threshold rises have been introduced one year earlier than planned. After that, both thresholds will remain at the same level in 2020-21 and then increase by CPI.
Pensions and savings tax
The lifetime allowance for pension savings will increase in line with CPI for 2019-20, rising to £1,055,000.
The band of savings income that is subject to the 0% starting rate will be kept at its current level of £5,000 for 2019-20.
The adult ISA annual subscription limit for 2019-20 will remain unchanged at £20,000. The annual subscription limit for Junior ISAs for 2019-20 will be uprated in line with CPI to £4,368
Stamp duty will be abolished for first-time buyers of shared-ownership homes for properties valued up to £500,000.
This change will be backdated to 22 November 2017, the date of the last Budget, so that those eligible who have not previously claimed first-time buyers relief will be able to amend their return to claim a refund.
The government will increase the Annual Investment Allowance to £1 million for all qualifying investment in plant and machinery made on or after 1 January 2019 until 31 December 2020, to help stimulate business investment.
New non-residential structures and buildings will also be eligible for a 2% capital allowance where all the contracts for the physical construction works are entered into on or after 29 October 2018.
The Chancellor announced that a new Digital Services Tax will be introduced from April 2020. It will be set at 2% on the revenues of big technology companies with global sales of more than £500m to ensure that the amount of tax paid in the UK is reflective of the value they derive from their UK users.
The government will consult on how the tax should work and will legislate in the Finance Bill 2019-20.