Autumn Budget 2018
Published / Last Updated on 07/07/2019
The Chancellor, Philip Hammond delivered his budget speech on Monday 29 October 2018. In general, this was a fairly neutral budget given that Brexit negotiations are not concluded so he gave himself room to manouever with the Spring Statement (due in March 2019) to be another 'full blown' budget speech, if required, depending upon the Brexit outcome.
That said, he currently has a better than expected economic and government finances to 'play with' given that government cutbacks in spending that have created a 'Brexit' war chest, left him 'wriggle room' for some budget gifts as well as a few 'stealth' tax increases.
Spreadsheet Phil, as he is known, proclaimed: “Fiscal Phil says fiscal rules ...OK!” and he plans to stick to basic economic principles to manage debt down and only spend what we have coming in.
Key points that will affect your finances are:
- The personal allowance and the higher rate threshold will rise, a year earlier than their manifesto promise, to £12,500 and £50,000 respectively.
- Capital Gains Tax (CGT) annual exemption increases from £11,700 - £12,000.
- Stealth Tax: CGT main residence relief changed, where a property was at some point your main residence, but has since been rented out, with now only that last 9 months of ownership (even if the property is let out), previously 18 months, to be included in the tax free period of ownership when calculating capital gains tax. This excludes when you go into a care home or if you are disabled, where the last 36 months of ownership (the pre 2015 level for all) remains intact.
- Stealth Tax: An additional to CGT on a previous main residence, now rented out property, Lettings Relief (which allowed you to claim up to an additional £40,000 of tax free capital gain), will change to only be available to those who stay in the property and take in a lodger or who go into a care home or are disabled. Effectively 'killing off' Lettings Relief for most landlords.
- Stealth Tax: ISA yearly investment limits to remain at £20,000. However, Junior ISA (JISA) limits have increased by CPI.
- Stealth Tax: £40,000 Annual Allowance unchanged. Tapered Annual Allowance unchanged. So just an inflation increase on the Lifetime Allowance to £1,055,000. Pensions “cold calling” also to be banned.
- Stealth Tax: No changes to inheritance tax main allowance, although the Residence Nil Rate Band has increased, but this was already planned a few years ago.
- Stealth Tax: Entrepreneurs’ relief qualifying period extended from 12 months to a minimum of 24 months of shares ownership.
- Stealth Tax: Single director company/owner/manager businesses to now be paid as if they are on normal payroll by the employing firm.
