On 29 October 2018 the Chancellor delivered his last Budget before Brexit takes effect. The backdrop to the current Budget included the expectation set by the Prime Minister’s announcement at the Tory party conference that “Austerity is over”, however, Mr Hammond only said that it was “coming to an end”.
From a personal tax perspective the Chancellor advised that he will raise an individual’s personal allowance to £12,500 from 6 April 2019. He also announced an increase to the basic rate threshold to £37,500. This means that individuals will only pay higher rate tax if they earn over £50,000.
The position is, however, slightly different for Scottish rate taxpayers. Whereas we will benefit from the increase to our personal allowances, our basic rate tax threshold for certain income (such as PAYE) will be set by the Scottish Government during the draft budget set for 12 December 2018.
On the capital tax side, the Capital Gains Tax (“CGT”) annual exemption will increase to £12,000 from 6 April 2019. There were, however, restrictions on the amount of relief individuals receive when they dispose of a property they previously used as their residence. The restriction of this relief, known as Principal Private Residence Relief and Letting Relief, will result in individuals paying more CGT.
There was also some talk that the Chancellor would abolish Entrepreneurs Relief (“ER”) which reduces the rate of CGT to only 10% for certain disposals. The Chancellor did, however, retain this relief but extended the qualifying period from 12 months to 24 months. This will take effect from 6 April 2019.
The Budget also contained some good news for businesses with a welcome increase in the Annual Investment Allowance (AIA) from £200,000 per annum to £1m per annum for the next two years.
The above is a brief summary of what was contained within the budget. If there are any further issues you would like to consider, please contact meContact Scott
If you like this article and would like to subscribe to INSPIRED, our FREE monthly newsletter, then please click SUBSCRIBE.Subscribe