EQ Weekly Roundup 30-10-18

This week’s roundup includes updates from the Chancellor’s Autumn Budget speech, including updates on improved borrowing figures, tax increases for the self employed and a new levy to tackle technology giants.

This week’s roundup includes updates from the Chancellor’s Autumn Budget speech, including updates on improved borrowing figures, tax increases for the self employed and a new levy to tackle technology giants. 

Hammond hails better borrowing figures

Chancellor Philip Hammond used this week’s budget speech to ease the government spending squeeze as he declared that austerity was ‘finally coming to an end’.

Against a backdrop of stronger tax receipts, Hammond said borrowing this year would be £11.6bn lower than projected in March, at £25.5bn.

Borrowing is expected to keep falling over the next five years. Bumper tax receipts and a stronger jobs market helped Hammond to land a £68bn borrowing windfall over the next five years.

The Office for Budget Responsibility (OBR) said this week’s spending promises – to the NHS, defence, schools and welfare – represented the biggest Budget giveaway since the independent fiscal watchdog was set up in 2010.

Contractors face higher income tax and NI

Hundreds of thousands of private-sector contractors face higher tax and National Insurance (NI) bills from April 2020.

If classified as an employee for tax purposes, they will have to pay income tax, and NI at 12% on the money paid for their work.

The Treasury has insisted these reforms would not affect anyone who was genuinely self-employed.

However, Chris Bryce, Chief Executive of the Association of Independent Professionals and the Self-Employed, said: ‘The government’s smash-and-grab mentality will therefore punish the overwhelming majority of genuinely self-employed people, heap a massive administrative burden onto businesses at a time of Brexit uncertainty, and also undermine one of the UK’s most dynamic and productive sectors.’

Tech giants face digital services tax

Technology giants will be forced to pay tax on the sales they generate in the UK, under new plans announced in this week’s budget.

Chancellor Philip Hammond plans to introduce a digital services tax from April 2020 following a consultation.

Companies such as Amazon and Facebook have been criticised for the small amount of tax they pay in the UK. To avoid targeting start-ups, Hammond announced companies with more than £500m in global revenue would be targeted.

However, Julian David – Chief Executive of industry body TechUK – said the proposed £500m threshold was ‘low’ and ‘risks capturing much smaller companies than anticipated’.

Hammond tweaks fiscal housing policies

More help for first-time buyers and plans for homes on the High Street were announced in this week’s budget announcement.

Most first-time buyers of shared ownership properties will now no longer pay stamp duty, under the measures.

Last year, this was abolished for first time buyers of properties worth up to £350,000. Now, this will apply to all shared ownership homes worth up to £500,000.

Elsewhere, the UK is facing a shortage of housing.  As part of his £1.5bn boost to help the UK’s struggling High Streets, Chancellor Philip Hammond announced he was creating a £675m fund to help councils transform their main retail zones. Part of this money could be spent on turning unused High Street shops or commercial buildings into homes, he said.