This was Philip Hammonds pre-Brexit budget and has been dubbed “the end of austerity”.Some commentators say it is a pre-election budget with treats in it for the Tory voters.So, what was there in this Autumn 2018 budget that impacts small businesses and their owners?
Personal allowance and jobs
- Personal tax allowance to increase to £12,500 in April 2019 from the current £11,850
- The point at which the higher rate of 40% income tax kicks in will increase to £50,000 in April 2019 from £46,350
- National Living Wage will increase by 4.9% from £7.83 to £8.21 an hour from April 2019
- Small companies’ contribution to apprenticeship levy to be reduced from 10% to 5%
- Lettings relief limited to properties where the owner is in shared occupancy with the tenant
Digital Tech Tax
- Big technology companies will have a new 2% digital services tax on UK revenues from April 2020. This will impact global sales of more than £500m.
- Business rates bill for firms with a rateable value of £51,000 or less to be cut by third over two years. This should benefit 90% of independent shops, pubs and restaurants, cutting bills by £8,000.
- I love this one – a new 100% mandatory business rates relief for all lavatories made available for public use. So hopefully you will find it easier to spend a penny when you are shopping….
- IR35 enhancement will extend the changes to the way self-employment status is taxed, from the public sector to medium and large private companies, from 2020. This would mean less people being able to benefit from working through a Ltd company doing contracting work.
Annual Investment allowance
- Increase in Annual Investment allowance to £1m from £200k for 2 years. So, if you buy equipment in a year over £200k and below £1m then you can still offset all of it against your Corporation Tax for that year.
- Entrepreneurs relief will remain, but the qualifying period will increase a minimum of 2 years
Overall it seems a good budget for small businesses, especially if you pay business rates as this will lower costs. The big thing about this budget is that if there is no Brexit deal then a lot may be reversed in the Spring budget as it relies and the continual free trade with the EU.