The Chancellors mood was buoyant as he relayed the UK’s economic prospects during his Budget speech. “The era of austerity is finally coming to an end” he declared.
He therefore declared some room for additional support for public services: NHS, schools, defence, social care and, overall, an assertion that shrinking budgets will start growing again. Overall, Mr Hammond has decided to spend rather than save – contingent on Brexit of course, and a ‘no-deal’ outcome would prompt a fresh fiscal update. Markets were little changed, although the pound did fall slightly against the euro and the US dollar.
There was not much in the way of tax changes other than a modest tax giveaway for individuals. The income tax personal allowance is to rise to £12,500 from April 2019 and the higher rate threshold to £50,000. These tax reductions were previous manifesto pledges, but the Treasury has opted to make the changes a year earlier than expected.
There is very little else to report in terms of personal finances. The adult ISA annual subscription limit for 2019-20 will remain unchanged at £20,000. The annual subscription limit for Junior ISAs for 2019-20 will be uprated in line with CPI, as previously flagged, to £4,368. There is no change to the pension annual allowance, but the pension Lifetime Allowance is to increase in line with CPI for 2019-20, rising to £1,055,000.
Other notable announcements included a proposed 2% UK digital services tax from April 2020, designed to target the UK revenues of large tech giants who shift profits overseas. There was also support for high streets with funds available to councils for improvements and a pledge to cut business rates by a third over the next two years.
It was anticipated that the property sector would see a number of changes. However, as it transpired there was relatively little. Stamp duty is abolished for first-time buyers of shared ownership properties valued up to £500,000. This change is backdated to 22 November 2017 so that those eligible who have not previously claimed first-time buyer’s relief will be able to claim a refund.
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