Chancellor of the Exchequer H.E Philip Hammond delivered his speech today at Westminster. He opened the speech with “A budget for the strivers, the grafters and the carers” and “era of austerity is finally coming to an end”.
We will look at some key points relevant to Contractors and Freelancers.
There were quite a few news articles circulated online suggesting Chancellor might be extending Public sector IR35 reforms to private sector by April 2019, but Chancellor stated “to give people and businesses time to prepare, this change will not be introduced until April 2020. Small organisations will be exempt, minimising administrative burdens for the vast majority of engagers, and HMRC will provide support and guidance to medium and large organisations ahead of implementation”. In our view Government is not prepared to implement this and with all the uncertainties surrounding Brexit we sincerely hope this will be totally wiped off!
Below are the key takeaways from today’s statement:
Personal allowance – the annual amount you can earn before paying tax – rises from £11,850 to £12,500 from April 2019 (one year earlier than planned). The threshold will remain at the same level in 2020-21.
No mention on reduction to Dividend allowance, so we assume it will remain at £2,000 from 6th April 2019.
Higher Tax Threshold
The starting point for paying the higher rate of tax (40% / 32.5% for Dividends) will move from £46,350 to £50,000 in England and Wales from April 2019, a year earlier than planned.
Watch this space for Scottish higher tax threshold to be announced.
Corporation Tax rate currently at 19% will reduce to 17% from April 2020.
National Living Wage
From April 2019 the National Living Wage (formerly known as National Minimum wage) will increase from £7.83 an hour to £8.21.
Some other points might be of your interest:
- A new railcard for all young people aged 26 to 30, will offer up to a 1/3 off most rail travel. This digital only card should be available by end of the year.
- Fuel duty will remain frozen for the ninth year in a row.
- Duty on beer, cider and spirits remains frozen.
- Short-haul rates of Air Passenger Duty will not rise for the eighth year in a row and Long-haul rates will rise in line with inflation.
- More money to improve Road networks and pot holes in UK, NHS and Schools.
- Measures to stop high street retail shop closures such as business rates relief, grants to redecorate commercial buildings etc.
- Introduction of new tax called “Digital services tax“: from April 2020, large social media platforms, search engines and online marketplaces will pay a 2% tax on the revenues they earn which are linked to UK users. This is mainly targeted at Google, Amazon, Facebook etc.
- All first-time buyers purchasing shared equity homes of up to £500,000 to be exempt from stamp duty.
- New 50p coin to commemorative Brexit coin to mark the UK’s exit from the EU.
Chancellor is confident he could implement these even with a “No Deal BREXIT” scenario and assured “double deal dividend” for the economy if an agreement with the EU is reached.
Please contact us if you are in doubt.