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Decoding The Budget

23rd November 2017

Decoding The Budget

Chancellor Phillip Hammond yesterday carried out an Autumn Budget for the first time in 20 years.

The Government’s financial statement contained a few surprise announcements, for example changes to Stamp Duty Tax for first time buyers. However, we want to delve into it and focus on the changes that affect you – as an employee or employer.

For low earning employees there was some good news, with announcements of increases to personal allowances and the national living wage.

Personal Allowance, or the amount you are able to earn before you start paying tax, will see two increases over the next few years. Currently £11,500, it is set to rise to £11,850 from April 2018. There will then be another increase in 2020 taking it to £12,500. This is good news for lower earners, giving them the chance to earn more before they start paying back in tax.

The National Living Wage is also set to rise. Currently at £7.50, it will rise to £7.83 per hour from April. For those who don’t know, the Living Wage is a benchmark set by the Government. Though it is legally unenforceable, it is the wage level recommended by the Government as the amount an individual needs to earn to cover the basic costs of living. It is different to the National Minimum Wage, which is the legal minimum a business is allowed to pay its employees. The Minimum Wage for young workers is set to rise in 2018.

Other changes to be introduced include changes to the Universal Credit benefit and a rise in the upper tax threshold. People waiting to receive their Universal Credit payment, will now have to wait five weeks. This is reduced by 7 days from previous waiting times and will be introduced in February 2018. The higher tax threshold will see two increases, moving to £46,350 from April 2018 and then up to £50,000 in 2020.

Finally, those with electric cars will be happy to see a change in rules meaning that they will not suffer a benefit in kind on the supply of electricity from employers if charging their car at work.

There were changes in business tax as well. It was confirmed that the VAT threshold is to remain at £85,000 for the next three years, ruling out any difficulties caused by changes to that. It was also confirmed that changes to business rates will be reviewed more regularly. Whilst they are currently re-evaluated every five years, this will be reduced to three years following the next one in 2022. More regular reviews will allow for comprehensive, up-to-date evaluations ensuring business rates are correct. These rates will also rise in line with the Consumer Prices Index, rather than the Retail Prices Index, from 2018.

 

 

 

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