Image Courtesy of Flickr_Ishan Manjrekar

Budget Snapshot 2018

The Budget statement was delivered today at 3.30pm by the Chancellor of the Exchequer, Philip Hammond.

This is the first Monday Budget since 1962, the year Ipswich Town were Football League Champions for the only time.

The Budget is a report presented each year by the Chancellor of the Exchequer to Parliament and the nation. The primary role of the Budget is to control public finances by setting out how much tax the Government will collect, how much the Government will borrow and how much the Government will spend. The Budget Responsibility and National Audit Act 2011 requires the Government to produce a Budget Report (which is the formal name for the Budget) for each financial year. The Charter for Budget Responsibility sets out what the Budget Report must cover.

When the Government publishes the Budget, the Chancellor gives a speech to Parliament in which he sets out the key decisions on tax, borrowing and spending, and his reasons for taking those decisions. This speech is known as the Budget Statement.

The official forecast on which the Chancellor bases the Government’s Budget is provided by the Office for Budget Responsibility (OBR). The Budget Responsibility and National Audit Act 2011 requires the OBR to publish two economic and fiscal forecasts for each financial year, including one published at the Budget. The OBR’s duty is to examine and report on the sustainability of the public finances and it is required to do so objectively, transparently and impartially.

PLEASE NOTE: This snapshot is not intended as an in-depth analysis of the Chancellor’s speech (we will leave that to the industry commentators and experts) but we hope this brief summary helps you gain a quick grasp on the key points delivered by the Chancellor from the dispatch box.

More details are available from HM Treasury website.

 

Main Headlines from the Speech

Introduction

This Budget is presented as the ‘era of austerity coming to an end’. If the fiscal outlook changes, that is if there is no Brexit deal, the Spring Statement will be upgraded to a Budget statement.

 

Forecasts

Growth 2019: 1.6%, up from 1.3% in the spring statement

2020: 1.4%, up from 1.3% in the spring statement

2021: 1.4%, matching 1.4% in the spring statement

2022: 1.5%, matching 1.5% in the spring statement

2023: 1.6% (new forecast)

Forecast for borrowing to be £11.6bn lower in 2018/2019 than forecast at the Spring Statement equivalent to 1.2% of GDP.

 

Borrowing forecast

£31.8bn in 2019/2020

£26.7bn in 2020/2021

£23.8bn in 2021/2022

£20.8bn in 2022/2023

£19.8bn in 2023/2024

 

Debt forecast

82.8% in 2019/2020

79.7% in 2020/2021

75.7% in 2021/2022

75.0% in 2022/2023

74.1% in 2023/2024

 

Taxation / Welfare / Finance

  • Personal allowance in 2019/2020: £12,500
  • Higher rate threshold in 2019/2020: £50,000
  • Stamp duty to be abolished for first-time buyers of shared-ownership homes for properties valued up to £500,000.
  • Private residence relief: Lettings relief to be limited
  • Entrepreneur’s relief: qualifying period to be extended to 2 years
  • IR35 rules to be extended to the private sector from April 2020 and will only apply them to large and medium-sized businesses
  • UK digital services tax from April 2020. Not to be on start-ups
  • HMRC to become preferred creditor in insolvencies.
  • Tax on plastic packaging containing less than 30% recyclable plastic.
  • Universal credit: all work allowances to increase by £1000.
  • Extra £1bn for universal credit over five years to fund extra protections for claimants moving over to UC.
  • National Minimum Wage: £8.21 up from £7.83 from April 2019

 

Housing / Infrastructure / Transport

  • £420m to be made available immediately to help councils tackle pot holes
  • No new PFI schemes £695m initiative to help small firms hire apprentices
  • £675m future high street
  • Business rates to be cut by one third for firms with a rateable value of less than £50,000 until next revaluation

 

Health / Education / Child Welfare

  • NHS 10-year plan to include a new NHS crisis service. Children and young people’s crisis teams will be available in all parts of the country
  • Mental health funding up by more than £2 billion by 2023/2024
  • Green paper on the future of social care to be published soon £400m fund to help schools buy ‘extras’ they need.

 

Excise Duty

  • Fuel duty frozen
  • Tobacco duty increased by inflation plus 2.5%
  • Beer and cider duty frozen
  • Duty on spirits frozen
  • Wine duty increased by inflation
  • No increase to air passenger duty on short haul flights

 

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