At Hugh Davies & Co we were primed for bad news - tax increases! After all the talk about extra money needed for the NHS and social care it felt like the ground had been laid, and that people were probably psychologically ready to accept some tax rises.
In the event there were no tax rises at all, apart from some indications about the tightening a number of rules for self-employed consultants and a proposed consultation on getting digital companies to pay some more tax.
Changes to personal allowances have been brought forward by one year. From April 2019 the personal allowance increases to £12,500 and the higher rate tax threshold to £50,000. Nice and easy to remember! The level at which employees start paying national insurance will only rise by inflation to £8,632 so you could say that there is a now a marginal starting tax rate of 12% for incomes between £8,632 and £12,500.
The pensions industry was braced for some changes to reduce tax benefits, particularly for higher rate taxpayers. The chancellor did not even mention the word in his budget speech! We strongly believe that pensions remain the single most tax-efficient method of saving for most people.
A one-third cut in business rates for retailers with rateable values of less than £51,000 will be very welcome for the shops, pubs and restaurants who qualify. A retailer paying say £18,000 in rates will save £6,000 from April 2019. There is no doubt that it has been pretty tough on the high street during the last few years so this really is an extremely helpful measure.
Buy to let has been attacked quite heavily in previous budgets with 3% additional stamp duty and restrictions to interest relief. This budget further restricted the capital gains tax allowances given to people who have actually lived in a property which has also been let for a period.
The chancellor has obviously decided to use unexpectedly high tax receipts to fund spending commitments rather than reducing the deficit, which goes slightly against his normally cautious stance. Politics and pressure from No 10 to support the assertion that austerity is over has undoubtedly played a part in this budget. Productivity remains a big problem in the UK economy and Brexit does, of course, loom over everything. If we have a clearer picture of where we are going with Brexit by March 2019 then a lot could suddenly change and this budget could be replaced by something quite different.
Tax planning is something that Hugh Davies & Co are firmly committed to. We have never been keen on complicated schemes that look too good to be true - and often are! There are many simple and sensible arrangements that can be put in place that can save tax, and cumulatively over a number of years these can make an enormous difference.
The old adage 'it is not what you make, it is what you keep' certainly holds true. Generally we pick up and discuss tax planning ideas at regular accounts meetings with clients, or when we complete tax returns. However, sometimes it can be useful to meet just to talk about tax.