Budget 2018 – Key Points

Personal taxation and wages

  • The personal allowance threshold, the rate at which people start paying income tax at 20%, to rise from £11,850 to £12,500 in April – a year earlier than planned
  • The higher rate income tax threshold, the point at which people start paying tax at 40%, to rise from £46,350 to £50,000 in April
  • After that, the two rates will rise in line with inflation
  • National Living Wage increasing by 4.9%, from £7.83 to £8.21 an hour, from April 2019.

Business and digital

  • New 2% digital services tax on UK revenues of big technology companies, from April 2020
  • Profitable companies with global sales of more than £500m will be liable
  • Private finance initiative (PFI) contracts to be abolished in future
  • New centre of excellence to manage existing deals “in the taxpayer’s interest”
  • Annual investment allowance to be increased from £200,000 to £1m for two years
  • Contribution of small companies to apprenticeship levy to be reduced from 10% to 5%
  • Business rates bill for firms with a rateable value of £51,000 or less to be cut by third over two years
  • Measure to benefit 90% of independent shops, pubs and restaurants, cutting bills by £8,000
  • £900m in business rates relief for small businesses and £650m to rejuvenate High Streets
  • New 100% mandatory business rates relief for all lavatories made available for public use
  • Extending changes to the way self-employment status is taxed, from the public sector to medium and large private companies, from 2020

Welfare and pensions

  • Work allowances for universal credit to be increased by £1.7bn
  • 4 million working families with children to benefit by £630 a year
  • An extra £1bn to help welfare claimants transfer to the new consolidated benefit
  • Chancellor insists controversial system is “here to stay”

Stamp duty and housing

  • All first-time buyers purchasing shared equity homes of up to £500,000 to be exempt from stamp duty
  • £500m for the Housing Infrastructure Fund, designed to enable a further 650,000 homes to be built
  • Lettings relief limited to properties where the owner is in shared occupancy with the tenant
  • New partnerships with housing associations in England to deliver 13,000 homes
  • Guarantees of up to £1bn for smaller house-builders

The economy

  • Era of austerity is “finally coming to an end”, the chancellor says
  • 2018 growth forecast downgraded to 1.3% from 1.5% in March, due to impact of bad Spring weather
  • But forecast for 2019 raised from 1.3% to 1.6% and annual forecasts raised to 1.4%, 1.4%, 1.5% and 1.6% in 2020, 2021, 2022 and 2023 respectively.
  • 3 million more people in work since 2010 and 800,000 more jobs forecast by 2022.
  • Wages growth at its highest in nearly a decade

Public finances

  • Public borrowing in 2018 to be £11.6bn lower than forecast in March, representing 1.2% of gross domestic product, (GDP) the total value of goods produced and services provided
  • Borrowing as a share of GDP to rise to 1.4% next year
  • Borrowing to total £31.8bn, £26.7bn. £23.8bn, £20.8bn and £19.8bn in next five years
  • Debt as share of GDP peaked at 85.2% in 2016-17, falling to 83.7% this year and to 74.1% by 2023-24
  • 2% annual average growth in departmental spending promised

Brexit

  • Extra £500m for preparations for leaving the EU
  • Spring Statement next March could be upgraded to full Budget if needed
  • A commemorative 50p coin to mark the UK’s departure from the EU

Transport, infrastructure and culture

  • A £30bn package for England’s roads, including repairs to motorways and potholes
  • A 30% growth in infrastructure spending
  • Opening the use of e-passport gates at airports – currently available to people from Europe – to those from the USA, Canada, New Zealand, Australia and Japan
  • Air Passenger Duty to be indexed in line with inflation