UK Budget 2018 roundup
Setting the scene:
The 2018 economic growth forecast was upgraded from 1.3% to 1.6% and public borrowing this year is expected to be £11.6bn lower than forecast in March.
Key points are:
Income tax
- The personal allowance and higher rate threshold will increase earlier than expected to £12,500 and £50,000 respectively from April 2019. The income tax rates and bands for Scottish taxpayers will be announced in Scottish Budget on 12 December.
- There are no other changes to income tax bands or allowances.
Pensions
- The pension lifetime allowance (LTA) will rise to £1,055,000 from April 2019.
- Reassuringly, there are no changes to pension annual allowances (AA). The standard AA remains at £40,000, the money purchase AA stays at £4,000 (with no carry forward) and there are no changes to the high income AA taper rules.
Capital gains tax
- The capital gains tax allowance will increase by £300 to £12,000 from April 2019.
Inheritance tax
- As expected, the IHT nil rate band will remain frozen at £325,000 until April 2021.
- The residence nil rate band will increase from £125,000 to £150,000 from April 2019, allowing some couples to leave up to £950,000 to future generations free of IHT.
Trust taxation
- There will be a consultation to consider the simplification and fairness of trust taxation (NB the existing IHT regime for trusts is notoriously complex and any attempt to simplify it is extremely welcome).
ISAs
- Annual ISA limits stay at £20,000 per person, with no reduction in the range of ISA options available to meet different needs.