Outlined are some of the key changes from today’s Budget and also our professional view as to how it will affect you and your business:-
National Living Wage will increase to £8.21
From April 2019 the National Living Wage will increase from £7.83 an hour to £8.21. This will benefit around 2.4 million workers, and is a £690 annual pay rise for a full-time worker.
Our View: A rise that will be appreciated by all lower paid workers.
The tax-free Personal Allowance will rise to £12,500
The Personal Allowance – the amount you earn before you have to start paying income tax– will increase by a further £650 in April 2019 to £12,500.
This rise comes a year earlier than planned, and will be maintained in 2020. This means a basic rate taxpayer will pay £1,205 less tax in 2019-20 than in 2010-11.
The Higher Rate Threshold will increase from £46,350 to £50,000 in April 2019
The amount people will have to earn before they pay tax at 40% will increase from £46,350 to £50,000 in April 2019.
This means that in 2019-20, there will be nearly 1 million fewer higher rate taxpayers than in 2015-16.
Our View: This was a welcome surprise as all previous talk was that these increases would have effect from April 2020. However, it does have a major impact on a large cross section of individuals and families and is certainly good news.
Short-haul rates of Air Passenger Duty will not rise
Short-haul rates of Air Passenger Duty will not rise for the eighth year in a row, keeping costs down for 80% of passengers. Long-haul rates will rise in line with inflation.
Our View: This is already a penal level of tax on travel set to rise for long haul flights. Again the question has to be asked is the travel industry’s voice really ever listened to by government. A reduction in our opinion would in fact benefit the treasury coffers more than this rise.
The Annual Investment Allowance will increase to £1 million from 1 January 2019 to 31 December 2020
The government will increase the Annual Investment Allowance five-fold from £200,000 to £1 million to help businesses to invest and grow.
Also, from October 2018, businesses will be able to deduct 2% of the cost of any new non-residential structures and buildings off their profits before they pay tax.
Our View: This is a welcome change for businesses who are looking to “invest to grow”. It has changed frequently in the past few years. At least though this change is in the right direction!
Government tightens rules for entrepreneurs relief.
To ensure it is going to be genuine entrepreneurs, the government will extend the minimum qualifying period from 12 months to two years.
Our View: This change shouldn’t effect too many businesses but is something that should be borne in mind to ensure this very valuable relief is not lost.
Our full budget summary will be officially delivered tomorrow, but in the meantime should you have any questions please do not hesitate to contact a member of our team today.