The Autumn Budget 2018 – what it means for you
Will it be ‘Here comes the sun’ or ‘Ain’t no sunshine’?
In his Autumn Budget, Chancellor Philip Hammond said that the recent (seemingly endless) period of austerity is drawing to a close and that the measures he will be introducing herald a brighter future. Hmm. The jury’s out at the moment. And everything could change again, with the thunderclouds of Brexit looming large on the horizon.
But how will the Budget affect you? The Chancellor’s speech didn’t really directly address the arts sector. However, he did throw out a few general titbits that could provide some rays of sunshine.
We’ve identified three specific issues that could affect you:
The Personal Allowance (‘You raise me up…’)
The Chancellor had at least one welcome surprise up his sleeve: he brought forward an increase in the personal tax allowance. The £650 increase (from £11,850 to £12,500) will now take place in April 2019 instead of 2020. This means a tax cut for some 32 million people, with a saving of £130 if you’re on the basic tax rate. And you could save a further £25 due to changes in National Insurance.
The Chancellor also brought forward an increase in the higher rate (40%) tax threshold. This will rise from £46,350 to £50,000 in April. So, if you earn £50,000 a year, you’ll have an extra £860 in your pocket. If you earn £50,000 to £100,000 a year, that gain will be offset by an extra £294 in National Insurance contributions. It will fall still further if you earn over £100,000, as your personal allowance will be reduced.
The Annual Investment Allowance (‘Higher and higher…’)
This allowance is important if you need to invest in expensive equipment, such as musical instruments or sound and lighting solutions, as it gives 100% tax relief in the first year. There will be a short-term, five-fold increase in the allowance for just two years: from 1st January 2019 to 31st December 2020, it will rise from £200,000 to £1 million. So, if you’re planning to make some big investments, try and plan them for this period. We can help if you need advice.
Personal Service Companies (‘People get ready…’)
Are you paid through a personal service company, set up to reduce your tax liability? This approach has now been virtually outlawed in the public sector and a similar crackdown in the private sector was expected in the Budget. This didn’t happen but has only been delayed for a year – so if you’re paid in this way, call us for advice as soon as possible.
In summary, the future remains hazy but the Chancellor did announce a few small rays of sunshine that might help to dispel the gloom. At least, that is, until the Brexit ‘Deal or No Deal’ situation becomes clearer…