The 2018 budget was announced by chancellor Philip Hammond on 29th October, as he laid out the government’s plans for the nation’s public finances. It’s the last budget before Britain exits the EU in March next year, and features a number of changes to the UK’s tax and pay rules.
These include a rise in the minimum wage from £7.83 to £8.21 per hour and an increase in the tax-free personal allowance from £11,850 to £12,500. The higher rate taxpayers’ threshold will also be raised from £46,351 to £50,000 in April 2019 – a year earlier than planned, due to estimates showing public finances are in a better state than expected.
In particular, no changes were announced to the taxation of pensions, to inheritance tax business property or agricultural property relief, to the headline rate of capital gains tax, or to income tax rates. There were no further changes to the taxation of non-UK domiciled individuals (a welcome respite after the changes made in April 2017 and April 2018);
There will be a consultation in January 2019 on the imposition of a 1 per cent stamp duty land tax surcharge for non-residents acquiring residential property in the UK.
Stamp Duty has also been abolished for first-time buyers of shared ownership properties valued up to £500,000.
Main residence relief
The Principal Private Residence relief exempts a gain on the sale of a main residence from Capital Gains Tax. Periods of absence can mean the relief is not available in full, however historically the final period of ownership has been allowed to account for difficulties in the housing market.
This final period of absence of up to 18 months is being reduced to nine months from April 2020. This reduction to the final period may be considered to be premature, given market conditions.
This relief is available to homeowners who may have received rental income at some time during the ownership of their main home. The criteria for the relief is being tightened from April 2020. It will only be available where the rental income arose through shared occupation, such as a lodger.
Those using Airbnb or similar services to generate rental income when they are absent from the property will no longer be able to claim lettings relief.
Crowe comments “In view of the short-term uncertainty created by Brexit, it was never going to be a Budget for big changes”.← Back to insights