Chancellor Philip Hammond has delivered his second Autumn Budget, exactly five months before Britain is due to leave the European Union.
The Chancellor was in bullish mood, asserting that the era of austerity is ‘finally coming to an end’ after a ‘long, hard journey’. However, he maintained that UK debt remains too high and highlighted the importance of continuing to reduce debt and borrowing.
Citing the latest economic forecasts from the Office for Budget Responsibility, Mr Hammond revealed that the UK growth forecast has been upgraded from 1.3% to 1.6% for 2019, while public borrowing in 2018/19 is set to be £11.6bn lower than previously forecast at the time of the Spring Statement.
With the Brexit negotiations ongoing, the Chancellor announced an additional £500m of departmental funding for Brexit preparations. He also raised the possibility of upgrading the 2019 Spring Statement to a ‘full fiscal event’ if no deal was agreed.
Key announcements for businesses include a two-year cut in business rates for small retail firms in England from April 2019, worth £900m, together with a £675m fund to help rejuvenate high streets. The Annual Investment Allowance (AIA) will also increase from £200,000 to £1m, for a period of two years.
Meanwhile, individual taxpayers are set to benefit from a bringing forward of the planned increase in the income tax personal allowance, which will rise by a further £650 in April 2019 to £12,500. The higher rate threshold will also increase from £46,350 to £50,000. However, from 2021, both thresholds will rise in line with CPI inflation.
The stamp duty relief for first-time homebuyers will be extended to shared equity purchases of up to £500,000, while the lifetime allowance for pension savings will increase to £1,055,000.
As widely anticipated, the Chancellor confirmed plans to introduce a new tax on the UK revenues of digital services companies from 2020, applying to those with global sales of more than £500m per annum. However, plans for a tax on takeaway coffee cups were overruled in favour of a new tax on plastic packaging containing less than 30% recycled material.
Turning to duties, tax on beer, most cider and spirits have been frozen. Wine duty will rise in line with inflation, while tobacco duty will continue to rise by inflation plus 2%.
Other announcements include confirmation of an extra £20.5bn for the NHS over the coming five years, together with additional funding to help welfare claimants transfer to Universal Credit. An additional £950m will be made available for the Scottish government, £550m for the Welsh government and £320m for the Northern Ireland Executive for the period to 2020/21.