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2018 Budget Highlights – How will it impact business owners?

On 29th October 2018 the Chancellor of the Exchequer Philip Hammond delivered his budget. If you’ve had time to read through the 120+ pages, you’ll already know what’s coming. If not, here are the main takeaways from the announcement and how this will impact UK businesses.

In the shadows of a ‘no-deal’ Brexit, there has been a lot of uncertainty surrounding Britain’s economic growth and how the Budget might play out. Prior to the announcement, the Chancellor repeatedly mentioned that this year’s Budget would be for hard-working families, prioritising rising wages, driving growth and increasing employment. He also make claims that the ‘age of austerity’ was coming to an end, confirming additional funding for the NHS.

The Budget in brief

IR35 changes

A further consultation on the detailed operation of the reform will be published in the coming months, and will inform the draft Finance Bill legislation that is expected to be published in summer 2019.

Personal Tax Rates, Thresholds and Allowances

Pensions and Savings:

National Living Wage

The National Living Wage will rise by 4.9% to £8.21

Business Taxes and Relief

Corporation Tax – Financial year 2019 (commencing 1st April 2019) = 19% Financial year 2020 (commencing 1st April 2020) = 17%

Entrepreneurs’ relief – From 6th April 2019, the minimum period throughout which the qualifying conditions for Entrepreneurs Relief (ER) must be met will be extended from 12 months to 24 months.

It was also announced that in addition to existing rules on share capital and voting rights, from 29th October 2018 shareholders must also be entitled to at least 5% of the distributable profits and net assets of a company to claim.

R&D Relief – No changes

Business Rates – Business rates for companies with a rateable value of £51,000 or less will be reduced by a third over two years.

Duties and Allowances

The final period exemption will also be reduced from 18 months to nine months. The government will consult on these changes.

There will be no changes to the 36 months final period exemption available to disabled people or those in a care home.

Digital Tech Tax

New Digital Technology Tax on UK revenues from the big tech companies like Google, Apple, and Facebook. This will extend to profitable companies with sales of more than £500 million globally.