Budget 2018 summary: Key changes and highlights
The chancellor Philip Hammond delivered his 72-minute speech in the third Budget on Monday October 29, 2018 at 3: 30 pm which includes the following points:
Personal Taxation and Wages
- The threshold of personal allowance, the rate at which people begins to pay income tax at 20%, increases from £11,850 to £12,500 in April – a year previously than planned
- The threshold of higher rate income tax, the point at which people begins to pay tax at 40%, increases from £46,350 to £50,000 in April.
- Later on, the two rates will increase in line with inflation.
- National Living Wage increases by 4.9%, from £7.83 to £8.21 an hour, from April 2019.
Business and Digital
- 2% new digital services tax on UK revenues of big technology companies, from April 2020.
- Profitable companies with worldwide sales exceeding £500m will be liable.
- Private finance initiative (PFI) contracts to be revoked in the future.
- New Centre of Excellence to take care of existing deals “in the taxpayer’s interest”.
- Increase in annual investment allowance from £200,000 to £1m for two years.
- Small companies contributing to apprenticeship levy to be minimized from 10% to 5%.
- Business rates bill for firms with an estimated value of £51,000 or less to be cut by third over two years.
- Beneficial measure 90% of independent shops, restaurants and pubs, cutting bills by £8,000
- Business rates relief of £900m for small businesses and £650m to reorganize High Streets
- New 100% compulsory business rates relief for all lavatories which are made accessible to public use.
- Widening changes to the way self-employment status is taxed, from the public sector to medium and large private companies, from 2020.
Tobacco, Alcohol and Fuel
- Duties of Cider, beer and spirits to be frozen
- Cost of a bottle of wine duty to increase by 8p, in line with inflation, in February.
- Continuation of tobacco duty to rise by inflation plus 2%
- A packet of 20 cigarettes will increase by 33p at 18.00 GMT
- A ten gram pack of cigars increase by 17p.
- Frozen fuel duty for ninth year in a row.
- Increase in Remote Gaming Duty to 21% for online gambling on “games of chance” from 2019.
Stamp Duty and Housing
- All first-time buyers buying shared equity homes of up to £500,000 to be exempted from stamp duty.
- £500m for the Housing Infrastructure Fund, meant to allow a further 650,000 homes to be built.
- Lettings relief restricted to properties where the owner lives in shared occupancy with the tenant.
- New partnerships with housing societies in England for delivering 13,000 homes.
- Limit of £1bn guarantees for smaller house-builders.
Welfare and Pensions
- Increase in work allowances for the universal credit by by £1.7bn.
- 4 million Working families with children to take advantage by £630 a year.
- £1bn extra to help welfare claimants transfer to the new consolidated benefit.
- Chancellor assert controversial system is “here to stay”.
The State of the Economy
- The chancellor says Austerity era is “finally coming to an end”.
- 2018 growth forecast degraded to 1.3% from 1.5% in March, due to the effect of bad spring weather
- But forecast for 2019 increased from 1.3% to 1.6% and annual forecasts raised to 1.4%, 1.4%, 1.5% and 1.6% in 2020, 2021, 2022 and 2023 respectively.
- More than 3.3 million people in work since 2010 and more than 800,000 jobs forecast by 2022.
- Growth in wages at its highest in nearly a decade.
The state of the public finances
- Estimated £11.6bn lower public borrowing in 2018 than forecast in March, which indicates 1.2% of gross domestic product,(GDP) the total value of goods manufactured and services produced.
- Borrowing constitutes a share of GDP to rise to 1.4% next year.
- Total borrowing constitutes £31.8bn, £26.7bn. £23.8bn, £20.8bn and £19.8bn in next five years.
- Debt as GDP share peaked at 85.2% in 2016-17, falling to 83.7% this year and to 74.1% by 2023-24.
- Promised 1.2% annual average growth in departmental spending.
- Additional £500m for preparing to leave the EU.
- Spring Statement next March could be boosted to full Budget if required.
- A memorial 50p coin to mark the UK’s departure from the EU.
Defence and Security
- An additional £160m for counter-terrorism police.
- An additional £1bn for armed forces, for cyber-capabilities and the UK’s new programme of nuclear submarine
- £10m for mental health care for veterans, to mark the Armistice centenary which brought World War One to an end
- £1m to finance school trips to World War one battlefields.
- £1.7m in Holocaust education programmes to mark the 75th anniversary of the liberation of Bergen-Belsen concentration camp, in northern Germany.
Education and Health (England only)
- Confirmation of an additional £20.5bn for the NHS over the next five years
- An additional minimum of £2bn a year for mental health services
- New mental health crisis centres, which offers support in every accident and emergency unit in UK.
- Provision of additional mental health ambulances and a 24-hour mental health crisis hotline.
- An additional of £700m for councils, for elderly care and those with disabilities
- Investment of £10m for air ambulances
- A one-off £400m “bonus” to assist the schools purchase “the little extras they need” this year
- Financing for 10 University Enterprise Zones
Transport, Infrastructure and Culture
- Investment of £30bn package for England’s roads, including repairs to potholes and motorways.
- Growth of 30% in infrastructure spending.
- Commencement of the use of e-passport gates at airports – presently available to people from Europe – to those from the USA, Canada, Australia, New Zealand and Japan.
- Indexation of Air Passenger to be in line with inflation.
Environment and Energy
- New taxation on plastic packaging which does not consist of 30% of recyclable material.
- No tax on takeaway coffee cups but to be re-evaluated if the industry doesn’t make sufficient progress
- £60m for trees plantation in England
- £10m to deal with deserted waste sites
Nations and Regions
- An extra £950m for the Scottish government, £550m for the Welsh government and £320m for a Northern Ireland Executive in the period to 2020-21
- New City and Growth deals for Belfast, the Tay Cities area, north Wales which comprises of the cities of Perth, Dundee as well as Angus and the north part of Fife,
- £2m for Belfast in order to recover from August’s Primark fire
- £70m for developing the Defence and National Rehabilitation Centre near Loughborough