Our Budget Highlights for Accountants
A lot of ground was covered in yesterday’s budget. We’ve picked out some of the major areas that were reported on by the BBC that we think are relevant to those working in accountancy and finance.
Personal income and tax:
- Tax-free personal allowance on income tax to rise to £11,850 in line with inflation in April 2018
- Higher-rate tax threshold to increase to £46,350
- National Living Wage to rise in April 2018 by 4.4%, from £7.50 an hour to £7.83.
Business and Economy:
- Growth forecast for 2017 slashed from 2% to 1.5%
- Forecasts for 2018, 2019, 2020 and 2021 revised down to 1.4%, 1.3%, 1.5% and 1.6% respectively.
- Annual rate of CPI inflation forecast to fall from peak of 3% towards 2% target later this year
- Another 600,000 people forecast to be in work by 2022
- £3bn to be set aside over next two years to prepare UK for every possible outcome as UK leaves EU
- Annual government borrowing £49.9bn this year, £8.4bn lower than forecast in March
- Borrowing forecast to fall in real terms in the subsequent five years from £39.5bn in 2018-19 to £25.6bn in 2022-23.
- VAT threshold for small business to remain at £85,000 for two years
- Rises in business rates to be pegged to CPI measure of inflation, not higher RPI, a cut of £2.3bn
- Capital gains tax relief for overseas buyers of UK commercial property to be phased out, with exemptions for foreign pension funds
And of particular interest to technology corporations:
- £500m support for 5G mobile networks, full fibre broadband and artificial intelligence
- A further £2.3bn allocated for investment in research and development
- Digital economy royalties relating to UK sales which are paid to a low-tax jurisdiction to be subject to income tax as part of tax avoidance clampdown. Expected to raise about £200m a year
- Tech giants targeted over VAT payments
Commuting and Travel
- £540m to support the growth of electric cars, including more charging points
- Young person’s railcard extended to 26-30-year-olds, giving a third off rail fares.