What did we learn from the Autumn Budget 2018?November 5, 2018Olivia Cheetham
The Chancellor of the Exchequer, Philip Hammond, announced the budget on Monday – a little earlier than usual due to Brexit negotiations and The Chancellor wanting to avoid Halloween for obvious reasons! Mr Hammond really tried to push home the “end of austerity” with his third budget but what does this mean and is it really true? Also, what will the impact be on recruitment agencies and the sector in general?
The key thing for recruitment agencies will be the delay of the IR35 reforms until at least April 2020. This will allow medium and large, private sector businesses more time to prepare which is crucial considering the fines and consequences of non-compliance. IR35 will have a significant impact on the recruitment sector so an additional two years for preparation should ease the burden placed on agencies and umbrellas. Whilst it has been a challenge, IR35 will go a long way in increasing compliance.
There had been talk of the VAT threshold being reduced from £85,000 to £50,000 however, the Chancellor instead froze the rate for at least the next two years. Small businesses will still need to reach a turnover of £85,000 before applying for VAT. Whether VAT rules will change or not when the UK leaves the EU is still to be decided but analysts have predicted a cost of at least £720 million per year for small business to reach VAT compliance.
The personal allowance rate has been changed with the minimum now being increased to £12,500 in April 2020 from £11,850. This has increased the amount people can earn before they are charged tax and national insurance. The threshold for high earners has increased to £50,000.
With auto-enrolment now in full swing we expected pensions to be more prominent in the budget but there was surprisingly very little on this topic. The Chancellor has committed to a consultation later this year to discuss the implementation of the Pensions Dashboard that will feature all state pension information. As part of the budget, Mr Hammond, announced he will soon introduce a ban on pension’s cold calling and pension’s fraud which have effected thousands of people.
As expected, the National Minimum Wage will increase from April 2019:
- National Living Wage (minimum wage for over-25s) to rise from £7.83 to £8.21
- Ages 21-24 minimum wage to rise from £7.38 to £7.70
- Ages 18-20 minimum wage to rise from £5.90 to £6.15
- Ages 16-17 minimum wage to rise from £4.20 to £4.35
- Apprentice wages to rise from £3.70 to £3.90
The following business changes have also been put in place
- Small business VAT thresholds will not be changed for at least two years (as above)
- Employment allowance will only be allowed for businesses with an employer national insurance bill under £100,000 a year from April 2020
- Apprenticeship levy contribution reduced for smaller firms from 10% to 5%.
- Increasing annual investment allowance from £200,000 to £1million for two years.
- Introducing a permanent tax relief for new, non-residential structures and buildings
At Easypay, we pay close attention to the Budget announcement each year to ensure we fully understand how it could impact us and our customers. If you have any questions as to the budget implications for you, or your business, we are always happy to discuss.
If you would like to know more, please contact our Customer Care Manager, Shelagh Ward, on 01943 882102 or email firstname.lastname@example.org.