All the key Budget tax changes

All the key Budget tax changes

Personal tax allowance increases and further measures against large firms avoiding tax were high on the chancellor's Budget agenda. 

"I didn’t come into politics to put people’s taxes up", chancellor Philip Hammond pledged in his latest Budget speech, delivered to a raucous House of Commons today (October 29). 

In the Budget, the self-proclaimed 'Fiscal Phil' said he would be bolstering the incomes of ordinary people in the UK by bringing forward planned changes to personal allowances into 2019.

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The Budget stated: "The personal allowance – the amount you earn before you have to start paying income tax– will increase by a further £650 in April 2019 to £12,500."

This increase comes a year earlier than planned, and will be maintained in 2020.

This means a basic rate taxpayer will pay £1,205 less tax in 2019 to 2020 than in 2010 to 2011.

Also, the higher rate threshold will increase from £46,350 to £50,000 in April 2019. 

This means the amount people will have to earn before they pay tax at 40 per cent will increase from £46,350 to £50,000 in April 2019.

This means that in 2019 to 2020, there will be nearly one million fewer higher-rate taxpayers than in 2015 to 2016, according to HM Treasury.

There was also good news for drivers, when Mr Hammond said that, in 2019, fuel duty will remain frozen for the ninth year in a row, saving the average driver £1,000 since 2010, and the cost of a pint of beer would be 2p lower than if duty had risen by inflation. 

But there was bad news for the FAANGs and other tech giants gaining revenue from the UK yet not paying enough tax.

The chancellor said: "From April 2020, large social media platforms, search engines and online marketplaces will pay a 2 per cent tax on the revenues they earn which are linked to UK users."

He added: "We are at a turning point in our history and we must resolve to go forwards, not backwards."

However, industry commentators have questioned whether these tax pledges will be enough to keep consumers and the economy moving as the UK heads towards its European Union exit in March 2019.

Russell Silberston, head of multi-asset absolute return at Investec Asset Management, said: “There are only four ways in which the government can spend more money; higher taxation, unfunded borrowing, higher economic growth or efficiency gains.

“In the event of a hard Brexit, it is widely assumed that there will be a severe economic shock which will put the government’s finances back under strain as automatic stabilisation spending increases and receipts fall.

"The Chancellor is then faced with an unappealing choice; he can raise taxation in the face of an economic slowdown, or he can allow spending to rise on an unfunded basis.

“Given the former is pro-cyclical, it seems his only choice would be to allow automatic spending to rise.  There will, however, be a modest offset from contingency funding which the chancellor has been holding back in case we do end up leaving the EU without a deal."