Many families in Britain, especially those on lower wages, have felt the squeeze in recent years of ever-increasing taxes and the rising cost of living. The government – far from being the silver bullet these budgets sometimes make out – actually makes life for Brits far more expensive than it has to be. ‘This will help families buy and save for the things that are most important for them’ A huge chunk of everyone’s salary is taken away through income tax, food is more expensive thanks to tariffs, green taxes make heating more expensive and if you drive to get around, 70 per cent of the cost of filling up your car is just fuel duty and VAT.
The Chancellor is set to announce his latest Autumn Budget. Moneywise will update this piece live as he announces new measures, tax changes and initiatives.
A new 26-30 year-old railcard will be made available to all by the end of 2018. The Chancellor says it will save 4.4 million young people save a third on their rail fares.
50p ‘Brexit’ coin
A special 50p coin to commemorate Britain leaving the EU will be issued next year.
The Chancellor is expected to announce extra funding for broadband connectivity to households in rural areas. This comes in the form of a £250 million spending pledge for the most remote parts of the UK to gain access to super-fast internet connections.
Digital services tax
The Chancellor has announced a “digital services tax” on large online businesses that generate at least £500 million per year globally from April 2020. The Chancellor says the tax will be designed to avoid hurting consumers and is instead aimed at large corporations that pay little tax in the UK currently. It is expected to raise £400 mill revenue each year.
The Chancellor will apply IR35 employment changes to private sector to large and medium sized businesses, having already implemented a crackdown in the public sector on employees who are paid via personal services companies to avoid paying tax. Currently, many workers function as self employed despite working only for one company, by setting themselves up as a ‘personal services companies’ (PSCs), as this provides a National Insurance tax break.
Angela James, director, contractor wealth & senior adviser, CMME comments: “The extension of public sector IR35 reforms to the private sector is disappointing at best.
“Although this is applied only to medium and large businesses at present, my concern is that increasing tax liabilities may spark a trend of the self-employed ditching their limited companies for umbrella ones, where all income will be PAYE. This disincentivises a fast-growing, entrepreneurial section of the economy.”
Duties on petrol, as previously announced, have been frozen for the ninth year in a row. Mr Hammond says this will save the average car driver over £1,000 and the average van driver £2,500.
Mr Hammond has announced that plans to raise income tax thresholds for millions of workers will be brought forward. The tax-free earnings threshold will be raised to £12,500 for the tax year beginning April 2019. The higher rate threshold will be raised to £50,000.
The Chancellor has announced a cut to stamp duty for first-time buyers of shared-ownership homes worth up to £500,000. The measure is restrospective, so anyone who bought a house since the last Budget will benefit. A further £500m is also being made available for the Housing Infrastructure Fund, to help build 650,000 homes.
Helen Morrissey, spokesperson at Royal London comments: “While the extension of this stamp duty relief will help first time buyers to get a step on the housing ladder we would argue that more can be done to make the housing market more liquid.
“While first time buyers can buy a home what of those further up the ladder who cannot afford to either move to a larger home to accommodate their growing families or those looking to downsize.
“We would urge the government to look at reliefs for those further up the housing ladder if we really want to free up the housing market.”
National living wage
The national living wage will increase from £7.83 to £8.21 from April 2019.
The Chancellor is expected to announce a consultation on the implementation of so-called ‘CDC’ (Collective Defined Contribution) pension schemes. CDCs differ from DB and DC schemes by combining individual worker contributions into a one larger pot, with a target aspired income set for each worker’s retirement.
The government will introduce a new tax on the manufacture and import of plastic packaging which contains less than 30% recycled plastic. However, no tax on plastic cups, including coffee cups, will be introduced as of yet.
The Chancellor has announced extra business rates tax relief for businesses that make lavatories available to the public. He also says businesses with a rateable value of £51,000 or less will have their business rates cut by a third in the next two years, worth up to £8,000.
The Chancellor has announced an immediate £420 million in funding for local authorities to tackle potholes on UK roads.
Beer and cider duty has been frozen for the next tax year. Duty on spirits has also been frozen. Wine duty will increase in line with RPI inflation.
The Chancellor has announced a further £650 million in grant funding for councils in England to pay for social care in 2019-20. He has also announced an extra £45 million disabled facilities grant in 2018-19.
Steven Cameron, pensions director at Aegon comments: “The commitment to provide an additional £650m of funding for social care will offer some relief to councils struggling with ever increasing demands.
“However, this is little more than a temporary, sticking plaster measure and we urgently need concrete, long-term proposals in the promised Green Paper on how to tackle the huge issue of funding social care costs.”
Work allowances under Universal Credit will increase by £1,000 per year.