Philip Hammond has said that the era of austerity is “finally coming to an end” as he delivered his final pre-Brexit Budget statement.
The chancellor unveiled a new “UK digital services tax” aimed at tech giants which are profitable and generate at least £500m a year in global revenues.
Promising a Budget for “Britain’s future”, Mr Hammond also earmarked an extra £1bn for the Department for Defence and set out the government’s plan for the NHS, including £2bn per year for mental health services.
He also promised an extra £1bn for the implementation of universal credit, which also faces widespread criticism for pushing vulnerable people into homelessness and food bank dependency.
The key budget announcements from Chancellor Philip Hammond:
Taxes & Wages
“Austerity is coming to an end but discipline will remain”.
Personal allowance is to £12,500 and the higher rate threshold to £50,000 from April 2019 “one year early”. He says it is a “tax cut for 32 million people” putting £130 in the pocket of a typical basic rate taxpayer.
From April the National Living Wage will rise by 4.9% from £7.83 to £8.21.
Fuel duty frozen for ninth successive year. Tobacco duty escalator to continue to rise at inflation plus 2%. Beer, cider and spirits duties frozen. Duty on wine to continue to rise in line with RPI inflation.
Corporate tax & spending
The UK is to introduce Digital Services Tax from April 2020. Expected to raise £400m annually. DST would only be paid by companies which are profitable and which generate at least £500m a year in global revenues. DST could be axed if OECD agrees international formula.
For smaller firms taking on apprentices, Apprenticeship Levy will be slashed in half.
Support for business includes opening the use of e-passport gates at Heathrow and other airports to include visitors from the US, Canada, New Zealand, Australia and Japan. £200m more funding to the British Business Bank.
Package of measures to stimulate business investment and signal “Britain is open to business” with increase to Annual Investment Allowance, from £200,000 to £1m for two years.
Commitment to tech with £1.6bn of new investments “to support our modern industrial strategy”.
High Streets
For the next two years, all retailers in England with rateable value of £51,000 or less will have business rates bill cut by a third.
“High street under pressure as never before” with support from £675m in co-funding for a Future High Streets Fund to help councils transform town centres.
A new mandatory business rates relief for all public lavatories – “so that local authorities can, at last, relieve themselves.”
Brexit
There will be an allocation of an extra £500m to government departments for “no deal” Brexit preparations.
Hammond says if UK gets it right in Brexit talks UK will “harvest a double Deal Dividend” – A boost from the end of uncertainty and a boost from “fiscal headroom” being held in reserve.
