A Round-up of the Spring 2020 Budget

If ‘a week is a long time in politics’, then nearly 18 months between Budgets must count as close to an eternity. And so it proves, if we consider the last Budget on 29 October 2018. Back then, Philip Hammond was the Chancellor, Theresa May was the Prime Minister, Brexit was due on 29 March 2019 and a General Election was not expected until May 2022. And Covid-19 had never been heard of. From a Treasury viewpoint, perhaps the most important element at the time was the Office for Budget Responsibility’s (OBR) forecast of a 2019/20 budget deficit of £31.8bn, up £6.3bn on the previous year.

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Spring 2020 Budget

Other notes and risk warnings

This article contains the opinions of the authors but not necessarily Donald Wealth Management (the Firm) and does not represent a recommendation of any particular security, strategy or investment product. Information contained herein has been obtained from sources believed to be reliable, but is not guaranteed. It is not a promotion of Donald Wealth Management’s services. Donald Wealth Management strongly suggests that no investor should act on any of these ideas without first seeking financial advice.

Past performance is not indicative of future results and no representation is made that the stated results will be replicated. The value of an investment is not guaranteed and on encashment you may not get back the full amount invested. Errors and omissions excepted.

Donald Wealth Management is a trading style of Donald Asset Management Limited which is authorised and regulated by the Financial Conduct Authority in the United Kingdom (FRN: 223784). Donald Asset Management Limited is registered in England and Wales under Company No. 4675082. The registered office address of the Firm is: Stable End, 12 Heather Court Gardens, Four Oaks, West Midlands, B74 2ST.

A Round-up of the Autumn 2018 Budget

The end to austerity takes shape

Delivered on a Monday afternoon instead of the traditional Wednesday, between key meetings in the Brexit negotiations and amidst turbulent times in Westminster, you could be forgiven for losing track of the 2018 Budget.

Despite the disruption, the Chancellor’s statement brought more focus to the pledged ‘end to austerity’, along with details of an extra £20 billion in funding for the NHS. Whilst many people were expecting tax rises, Mr Hammond’s job was made easier in the lead up to the Budget by updated forecasts from the Office for Budget Responsibility showing borrowing was £13 billion lower than expected.

One of the most high-profile announcements by Mr Hammond is a new digital services tax – dubbed the ‘Amazon tax’ by the media. Targeted at large companies, the tax has been set at 2% of revenue derived from UK users through use of things such as search engines, social media platforms and online marketplaces.

Coupled with this tax, and with the UK high street reeling from various high-profile company failures, the Chancellor also announced a cut in business rates for smaller retail businesses. From April 2019 retail property with a rateable value below £51,000 will see their bills cut by one third. Local newspapers will receive a further £1,500 discount and even public lavatories will have a new 100% relief.

Not content with appealing to small businesses and the high-street, Mr Hammond also sought to win favour with larger-than-expected increases to the personal allowance and higher rate threshold. Originally a part of the Conservative manifesto, the increases have been brought forward by a year – from April 2019 the personal allowance will increase to £12,500 and the higher rate threshold will be raised to £50,000.

Of course, while the Budget has been delivered, voices from all corners – including Mr Hammond himself – have warned that another Budget could soon be necessary. Whether it’s a result of the Brexit negotiations or after a General Election, we may see changes to the country’s finances in the near future.

In the meantime, there could well be many popular aspects of this Budget. Across the changes to income tax, the politically timely digital services tax, the ninth consecutive year of frozen fuel duties and various spending announcements across roads, high-street environments and tree-planting, it seems clear Mr Hammond wants his end of austerity to be believed.

 

Other notes and risk warnings

This article contains the opinions of the authors but not necessarily Donald Wealth Management (the Firm) and does not represent a recommendation of any particular security, strategy or investment product. Information contained herein has been obtained from sources believed to be reliable, but is not guaranteed. It is not a promotion of Donald Wealth Management’s services. Donald Wealth Management strongly suggests that no investor should act on any of these ideas without first seeking financial advice.

Past performance is not indicative of future results and no representation is made that the stated results will be replicated. The value of an investment is not guaranteed and on encashment you may not get back the full amount invested. Errors and omissions excepted.

Donald Wealth Management is a trading style of Donald Asset Management Limited which is authorised and regulated by the Financial Conduct Authority in the United Kingdom (FRN: 223784). Donald Asset Management Limited is registered in England and Wales under Company No. 4675082. The registered office address of the Firm is: Stable End, 12 Heather Court Gardens, Four Oaks, West Midlands, B74 2ST.

A Round-Up of the Autumn Budget

If the chancellor was asked to produce a Budget that would not rock the political boat, then it looks as if that is what he has delivered. The total net cost of his policy decisions for 2018/19 was a little over £6 billion with just £1.585 billion attributable to tax policy decisions.

The main tax changes announced were as follows:

  • First time buyers (outside Scotland) will pay no stamp duty land tax on the first £300,000 of the purchase price for a home provided its value does not exceed £500,000. Gains on disposals of all UK property (including commercial property) will be subject to UK tax on gains by non-UK residents accruing from April 2019.
  • The corporate indexation allowance will be frozen from January 2018, so that companies will no long benefit from relief for inflation after this date on their capital gains.
  • The VAT registration threshold will be frozen at £85,000 for 2018/19 and 2019/20.
  • Online marketplaces will become jointly and severally liable for the unpaid VAT of all UK traders, as well as overseas traders.
  • Relief for venture capital trusts, enterprise investment schemes and seed enterprise investment schemes will be focused on companies where there is a real investment risk. A number of other provisions will tighten up the rules for these investments.
  • The existing diesel supplement for diesel company cars will be increased from 3% to 4% from April 2018 for cars that do not meet the RDE2 emissions limits. The fuel benefit and van benefit charges will increase in line with RPI (and vehicle excise duty) from April 2018.
  • There will be a number of changes to business rates, including: bringing forward to 2018 the switch in indexation from RPI to the generally lower CPI; retrospective legislation to deal with the impact of the so-called ‘staircase tax’ by recalculating valuations and qualification for small business relief to the position in the period before April 2010; increasing the frequency of revaluations to every three years after the next valuation due in 2022.
  • The pension lifetime allowance will be increased from £1 million to £1.03 million from April 2018. There will be no change to the annual allowance.
  • The ISA limit will be frozen at £20,000 and the LISA limit at £4,000, but the junior ISA and child trust funds will rise to £4,260 from April 2018.
  • The income tax personal allowance will rise to £11,850 and the higher rate tax threshold for the UK (excluding non-savings, non-dividend income in Scotland) will rise to £46,350 for 2018/19.
  • There will be a raft of provision against tax avoidance and evasion. The government will consult on further measures to tackle non-compliance with the intermediaries legislation (often known as IR35) in the private sector. A possible step will be to extend the recent public sector changes to the private sector.
  • The government will also consult on reforming the taxation of trusts.

Other notes and risk warnings

 This article is distributed for information purposes and should not be considered investment advice or an offer of any security for sale. This article contains the opinions of the author but not necessarily Donald Wealth Management (the Firm) and does not represent a recommendation of any particular security, strategy or investment product.  Information contained herein has been obtained from sources believed to be reliable, but is not guaranteed. It is not a promotion of Donald Wealth Management’s services.

The past is not indicative of future results and no representation is made that the stated results will be replicated. Errors and omissions excepted.

Donald Wealth Management is a trading style of Donald Asset Management Limited which is authorised and regulated by the Financial Conduct Authority in the United Kingdom (FRN: 223784). Donald Asset Management Limited is registered in England and Wales under Company No. 4675082. The registered office address of the Firm is: Stable End, 12 Heather Court Gardens, Four Oaks, West Midlands, B74 2ST.