The Chancellor, Philip Hammond’s last budget before Brexit in March 2019. This budget was hailed as an end to austerity where the Government loosened the purse strings for the first time in ten years. Here are some of the most relevant highlights;
Personal allowance and higher rate threshold – The Personal Allowance will increase to £12,500 in 2019/20. The basic rate limit will increase to £37,500 meaning that the higher rate threshold will be £50,000 in 2019/20. These thresholds will remain at the same levels in 2020/21 and then increase by CPI from 2021/22 onwards. Changes to the basic rate limit, and higher rate threshold, will apply to non-savings, non-dividend income in England, Wales and Northern Ireland and to savings and dividend income in the whole of the UK.
National Insurance Contributions Bill – As previously announced in September, the government will not abolish Class 2 NICs during this Parliament, given the potential impacts on some of the lowest earning in society. There are two remaining measures in the draft NICs Bill published on 5 December 2016: reforms to the NICs treatment of termination payments and income from sporting testimonials. The government still intends to legislate for these reforms, which will take effect from April 2020.
Starting rate band for savings – The band of savings income that is subject to the 0% starting rate will remain at its current level of £5,000 for 2019/20.
Dividend allowance and Personal Savings Allowance – will remain at the same levels in 2019/20 so £2,000 dividend allowance and £1,000/£500 personal savings allowance for basic rate and higher rate taxpayers respectively
Individual Savings Account (ISA) annual subscription limits – 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 to £4,368.
Improving NS&I’s offer to customers – NS&I will allow people other than parents and grandparents to gift Premium Bonds to a child. This, alongside a lower minimum investment of just £25 and the launch of a new app, will make saving with NS&I easier.
Boosting pensions for the self-employed – This winter, DWP will publish a paper setting out the government’s approach to increasing pension participation and savings persistency among the self-employed. This follows the 2017 review of automatic enrolment and will focus on expanding evidence through a programme of targeted interventions and partnerships.
Banning pensions cold calling – Cold calling is one of the most common methods used to initiate pension fraud. To help protect people from fraudsters, the government is publishing a response to its consultation alongside the Budget and will shortly be implementing legislation to make pensions cold calling illegal.
Lifetime allowance – The lifetime allowance for pension savings will increase in line with CPI for 2019/20, rising to £1,055,000 (slightly higher than expected as it has been rounded up to the nearest £1,000 rather than the nearest £100 as stated in legislation).
Capital Gains Tax: annual exempt amount for tax year 2019/20 – The Capital Gains Tax annual exempt amount increases to £12,000 for individuals and personal representatives and £6,000 for trustees of settlements for the period 2019/20 (reduced where a settlor has created more than one trust).
Stamp Duty Land Tax (SDLT) and first-time buyers relief – The government will extend first-time buyers relief in England and Northern Ireland so that all qualifying shared ownership property purchasers can benefit, whether or not the purchaser elects to pay SDLT on the market value of the property. This change will apply to relevant transactions with an effective date on or after 29 October 2018 and will also be backdated to 22 November 2017 so that those eligible who have not previously claimed first-time buyer’s relief will be able to amend their return to claim a refund.
This communication is for general information only and is not intended to be individual advice. It represents our understanding of law and HM Revenue & Customs practice as at 30.10.2018. You are recommended to seek competent professional advice before taking any action.