As a leading supplier of accounting services to sole traders and businesses alike, we make it our mission to stay ahead of the latest financial news so our clients don’t have to. It’ll come as no surprise that we’ve been busy of late keeping up to date with the recent 2018 Budget announcement delivered by Chancellor Philip Hammond. As usual the Budget saw a number of key announcements made, changes that are set to alter the way all of us live our personal and professional lives, and manage our finances.
In this blog post, we take a look at how the latest 2018 Budget will affect you so you can get a clear view of your finances for the year ahead and beyond.
Most will pay less tax – and you’ll see a change as early as next April
Whether you’re an employee, sole trader or business owner, you’ll be aware of the personal allowance that you can earn before you have to begin paying income tax at the basic rate. The personal allowance for this tax year – which started on 6th April 2018 and is set to end on 5th April 2019 – is £11,850. In the next tax year, this personal allowance will rise to £12,500, giving most the chance to earn more before the taxman gets involved.
Higher rate taxpayers will also reap the rewards of the 2018 Budget. Chancellor Philip Hammond announced that the higher rate tax threshold will increase from £46,350 to £50,000.
Wages for workers aged 25 and over will also get a boost
As well as having the opportunity to keep more of your money, workers aged 25 or over and in receipt of the National Living Wage will be paid more for their hard work. Currently sitting at £7.83 per hour, the National Living Wage will increase in April 2019 to £8.21 per hour.
They’ll be extra funds for those claiming Universal Credit
Universal Credit provides a lifeline for a vast number of individuals throughout the UK. Paid monthly to help with living costs, Universal Credit is accessible to claimants who are on a low income or currently out of work.
The 2018 Budget revealed dramatic plans to overhaul the welfare system that millions of people rely on, and announced that various transition measures will be actioned over the next five years. Whilst details of most of these measures weren’t forthcoming, the Chancellor has pledged an additional £1 billion to top up Universal Credit payments. Work allowances are also set to be increased once the roll out of Universal Credit has been completed.
It’s not all great news – particularly for the self-employed
The employment status of some self-employed professionals has been under scrutiny for a number of years, and it seems that all eyes will be on this particular, fast growing sector in the future too. The Treasury stated that it believed that around one third of those who claimed to be self-employed were in fact employees in disguise. Cue a number of reforms in the private sector from April 2020, changes that could see some self-employed people paying more tax and National Insurance.
Want to know more about how the 2018 Budget will affect you? Contact our team direct for accounting advice and support.