Budget 2018 at a glance

The 2018 budget highlights at a glance

Outlook

• Growth forecast: +1.6% in 2019, +1.4% in 2020/21, +1.5% 2022, +1.6% in 2023

• 800,000 more jobs by 2023

• OBR predicts real wage growth year-on-year to 2023

• Borrowing lower than the spring statement forecast by £11.6bn at just 1.2% of GDP. Borrowing is expected to exit 2021 at 1.3% of GDP, this being 0.7% better than the fiscal rules target. This leaves a headroom of £15.4bn against the target.

• Borrowing forecast £31.8bn in 2019/20, £26.7bn in 2020/21, £23.8bn 2021/22, £20.8bn in 2022/23 £19.8bn in 2023/24.

Personal Tax

• From April 2019, personal allowance increases 1 year early from £11,850 to £12,500. The upper limit of the basic tax rate increases from £46,350 to £50,000. The basic rate band therefore moves from £11,851 - £46,350 to £12,501 - £50,000 from 5th April 2019. Indexed to inflation from 2021/22

• Family homes to be excluded from Capital gains tax

• From April 2020 lettings relief will be limited to properties where the owner is in shared occupancy with the tenant; Period of exemption halved from 18 months to 9 months

• No stamp duty for FTB of shared ownership for properties valued up to £500,000 to be applied retrospectively to budget 2017

• Work allowances to increase by £1,000 per annum

• From April 2019, National living wage will increase from £7.83 to £8.21

Business Tax

• Annual investment allowance increases from £200,000 to £1m for 2 years

• Targeted relief on acquisition of IP rich businesses Permanent tax relief for new non-residential structures and buildings (partially achieved through an adjustment of the special WDA from 8% to 6%)

• £200m funding to the British Business Bank to replace the European Funding which will be lost due to Brexit.

• Extension of start-up loans funding to 2021

• Reduction in Apprenticeship levy for small businesses from 10% to 5%

• From April 2020 the employment allowance will now only be applicable to is to Small and Medium-sized businesses with an Employer NI bill below £100,000 per year.

• Treatment of capital losses to be aligned with income losses for larger companies

• Entrepreneurs relief qualifying period doubled from 12 months to 2 years

• VAT registration thresholds remain unchanged till April 2021

• From April 2020, new UK digital services tax on revenue for established Tech businesses that are profitable and generate over £500m per annum. No detail available currently. Remains subject to change in the event a new approach is agreed with OECD and G20.

• HMRC becomes a preferred creditor in business insolvency

• PAYE cap to be introduced for R&D tax credits and is to be managed through the Small and Medium sized company scheme

• For businesses with a rates bill of £51,000 or less, a 33% reduction will be applied with immediate effect until April 2021. From April 2021 rates revaluations will be adjusted to reflect rental values.

• Freeze on fuel duty (9th year running), beer, cider and spirits duty; RPI increase on wine. New tax to be applied to white cider.

• Tobacco duty to increase by Inflation + 2%

• Roll-out of IR35 to the private sector. Small businesses will be exempt.