The third budget from Phillip Hammond was announced yesterday with good news for recruitment consultants, as 3.3 million more people are working since 2010 and 800,000 more jobs are forecast by 2022, additionally wages growth is at its highest in nearly a decade. Plus £900m in business rates relief for small businesses.
More importantly, the chancellor said the framework for implementing the IR35 changes in the private sector would not be introduced until April 2020, a year later than initially thought. The framework means that although PSCs will lose their right to decide their own IR35 status, this will only apply to those PSCs whose clients are large and medium sized companies. No doubt there will be plenty of discussion over the coming year to decide how this is measured!
We have also summarised the main highlights below:
Personal Tax and Living Wage
For the personal allowance threshold, this will rise to £12,500 in April, a year earlier than planned, the higher rate threshold will also rise to £50,000. Additionally, National Living Wage will increase to £8.21 from £7.83 from April 2019.
A new 2% digital services tax on UK revenues of big technology companies, from April 2020 with profitable companies with global sales of more than £500m being liable. Business rates bill for companies with a rateable value of £51,000 or less to be cut by a third over two years and a new 100% mandatory business rates relief for all lavatories made available for public use.
Alcohol, Tobacco and Fuel
Beer, cider and spirits duties are to be frozen however the cost of bottle of wine duty is to rise by 8p in February. Tobacco duty will rise again by inflation plus 2% and a packet of cigarettes went up by 33p at 6pm yesterday. Fuel duty has been frozen again for the ninth year in a row.
Housing and Welfare
For those first-time buyers purchasing shared equity homes of up to £500,000 they are to be exempt of stamp duty. Guarantees of up to £1bn for smaller house builders and new partnerships with housing association in England to deliver 13,000 homes. Work allowances for universal credit to be increased by £1.7bn and 2.4 million working families with children to benefit by £630 a year. A promise of an extra £1bn to help welfare claimants transfer to the new consolidated benefit.
Public borrowing in 2018 to be £11.6bn lower than forecast in March and borrowing as a share of GDP to rise to 1.4% next year.
The B word
An extra £500m has been allocated for preparations for leaving the EU along with the announcement of a commemorative 50p to mark the UK’s departure from the EU.
Defence and Security
An extra £160m for counter-terrorism police plus an extra £1bn for armed forces, for cyber capabilities and the UK’s new nuclear submarine programme. £10m for mental health care for Veterans and £1m to fund to school trips to World War One battlefields.
England Education and Health
The chancellor confirmed that an extra £20.5bn will be given to the NHS over the next five years and a minimum extra of £2bn a year for mental health services. An extra £700m for councils, for care for the elderly and those with disabilities and £10m for air ambulances.
Additionally a £30bn package for England’s roads including repairs to motorways and potholes plus a new tax on plastic packaging which does not contain 30% recyclable material.
The chancellor stated that the era of austerity is finally coming to an end and that the 2018 growth forecast downgraded to 1.3% from 1.5% in March due to the impact of bad Spring weather.