Income Tax – Most people who work and pay tax in the UK will pay a little bit less tax from April next year, as the tax limits have risen slightly. For someone with taxable income of £40k they will be around £70 better off in the year; for those earning £50k and over then you are £340 better off. So not great sums of money but every penny helps.
Our advice for 40% and above taxpayers – don’t forget those tax free ISA’s offering a higher interest rate. You can put £20k into an ISA every year.
VAT – no change. Limits have been frozen for a couple more years.
Smokers – smokers have been hit hard, with an above inflation increase of 5% extra cost added onto a packet of cigarettes/cigars
Drinkers – If you drink lager, beer or spirits in England and Wales, then no real change, although at the real cheap end of the alcoholic drinks market, prices on low cost booze like “white cider” drinks are being increased in a bid to discourage heavy drinking. Scotland are in the process of introducing a minimum price per alcohol which could increase the prices of cheaper drinks.
Cars – for most drivers, there is no change with fuel duties frozen again, so just find yourself that cheapest price on the forecourts. However, if you have a diesel company car, this has become more expensive with an additional 1% tax charge per year, leaving you a bit more out of pocket. The Government is again focused on promoting “Green” Environmentally friendly cars.
For those trading through, or thinking of trading through a Limited Company, and you want to buy a car through your company, then our advice as always is to “talk to us before you buy” – as there have been small changes to some of the rules and tax. When you buy a car, as well as what you buy, could be the difference between having extra money in your pocket or being out of pocket.
Buying your 1st property – stamp duty is being removed if you buy a house anywhere for under £300k and in expensive areas (London for example) you can buy a property up to £500k and only pay stamp duty on the amount between £300k and £500k. This can save you up to £9,000 on houses under £300k.
However, if you are not a 1st time buyer but want to buy a place with someone who is a 1st time buyer then unfortunately this is help is not available to you, as both of you must be first time buyers. Our advice – Save stamp duty by getting the first time buyer to buy the house themselves, and then add the other person’s name on to the mortgage at a later date.
However like most budgets, “The Devil is in the Detail”. Tucked away in the supporting Budget paperwork there is one fly in the ointment. HMRC are going to start a review and consultation process looking at who can be self employed and/or operate through a Limited Company. This is not just for the media industry; it applies to all trades and professions. HMRC really would like to see everybody in the UK being on a PAYE contract rather than freelance contract – it means they get more tax in their coffers and it comes in easier and quicker than it does at the moment if you work for yourself.
You might already be aware that the BBC and Channel 4 are already under the cosh and being pressured by HMRC to make freelancers into PAYE employees.
Our view is that this is a huge topic to review and have a consultation on and it will impact on some very big and powerful businesses that have real clout with the government. In any event any changes are not going to come in in the short term – we predict that the earliest practical date it could be brought in would be April 2019. For most of our clients who are freelancers this will be a worrying development but rest assured that we will keep you fully updated on what is going on.