Philip Hammond announced an earlier than usual budget this year, mainly due to the need to create some clarity around numerous financial decisions before a final Brexit deal is reached between the UK and the rest of the EU.
With the November deadline looming, the Chancellor will announce the changes to the country, with a focus on ending austerity, and raising an additional £20bn for the NHS by 2023.
What can we expect…
Tech Tax, AKA “Amazon Tax”
It is expected that Philip Hammond will announce major changes to the way tech giants such as Amazon, Google and Facebook pay tax in the UK. Currently a number of these tech companies hop across jurisdictions, thus saving them millions in tax.
Mr Hammond has strong feelings about this and said:
“The best way to tax international companies is through international agreements, but the time for talking is coming to an end and the stalling has to stop.”
Any changes will require the support of other countries, and unsurprisingly, the move has been seen as a bad one by many skeptics, including The Confederation of Brisith Industry and the Institute of Directors, who both see it as a way of repelling businesses from wanting to build roots in the UK and do business.
Pensions Tax Relief
This costs the government around £40bn a year in potential taxes.
Currently a basic rate tax payer who put £8,000 into their pension would effectively receive a £2,000 contribution from the government through tax breaks.
Higher rate tax payers would claim a further £2,000.
It is expected there will be some changes to this, enabling the government to claw back some of that £40bn.
Freelancers working through their limited companies have previously been able to be classed as self-employed. With the proposed changes, it would see company owners face the same levels of tax and national insurance as employees. This has been met with some criticism as some genuine freelancers may end up being caught in the cross-fire and end up being classed as employees.
Theresa May announced in the past few weeks that the policy introduced by George Osborne would remain in place – freezing fuel prices for a ninth consecutive year, despite costing the Treasury a potential £38bn over the period.
So plenty of potential changes ahead, but with the Brexit negotiations so close, could the budget changes be only minor or will Philip Hammond feel the need to prepare the UK for a no-deal Brexit?
Check out our article after the budget for how the changes might affect property investors, if at all.