Chancellor Philip Hammond's Autumn Budget promised an end to the austerity era after a 'long, hard journey' just months before the UK is due to leave the EU. Clare Elsby of Elsby & Co Accountants and Business Advisors looks behind the headlines.
WHILE announcing the end of austerity the Chancellor also maintained that UK debt is still too high and highlighted the importance of continuing to reduce borrowing.
Citing the latest economic forecasts from the Office for Budget Responsibility, Mr Hammond revealed that the UK growth forecast has been upgraded from 1.3 per cent to 1.6 per cent for 2019, while public borrowing in 2018/19 is set to be £11.6bn lower than previously forecast at the time of the Spring Statement.
All of this, of course, takes place against the backdrop of ongoing Brexit negotiations, and the Chancellor announced an additional £500m of departmental funding in preparation for leaving the EU. Despite this, detail on these plans remained light, perhaps opening the way for a Spending Review next spring, which could have the potential to become another full-blown Budget.
For businesses, key announcements included a two-year cut in business rates for small retail properties in England from April 2019, worth £900m, together with a £675m fund to help rejuvenate high streets. The Annual Investment Allowance will also increase from £200,000 to £1m for a period of two years.
Digital tax for tech giants
As widely anticipated, the Chancellor also confirmed plans to introduce a new tax on the UK revenues of digital services companies from 2020. He said 'established tech giants' will be targeted rather than start-ups and so this will apply to those organisations with annual global sales of more than £500m
Research and Development limits
One particularly important budget change was the announcement that a limit will be introduced on the amount of payable tax credit that can be claimed by a company under Research and Development (R&D) tax relief.
This will be set at three times the company's total PAYE and NICs payment for the period and will come into effect for accounting periods beginning on or after 1 April, 2020.
At Elsby & Co we've helped many of our clients claim back thousands of pounds in this area and we highly recommend that businesses contact us at the earliest opportunity to see if they have a claim and allow us to prepare the necessary paperwork well in advance of these new restrictions.