Last Monday afternoon, the Chancellor Phil Hammond announced the final Budget before the next big ‘B’ day, Brexit, on the 29 March 2019.
Worryingly, the Office for Budget Responsibility (OBR) issued a strong statement that ‘there remains no meaningful basis on which to predict the outcome of current negotiations over the relationship between the UK and EU after Brexit’. As a result, the Chancellor introduced a series of short term spending measures for the NHS and education including £300 million for shared education for Northern Ireland.
There were some early Halloween sparklers, where the Chancellor is increasing the personal allowance to £12,500 and the higher rate tax threshold to £50,000 a year early, from next April. He also provided some good news for Northern Ireland, with his approval of the £350 million funding for the Belfast Region City Deal and an additional £2 million for city centre business to assist with the aftermath of the Bank Buildings fire. This is welcome, particularly in light of the ‘exclusion zone’ and Danske Bank’s recent Consumer Index that shows consumers here have been at their lowest ebb this year as pressures of Brexit uncertainty and rising prices take their toll.
We are currently working closely with a wide range of clients to prepare and implement ‘no deal’ contingency plans and have found many are postponing expansion plans, therefore we welcome the increased capital investment reliefs introduced. The annual investment allowance, which provides for 100% tax relief on qualifying plant and machinery, has been increased from £200,000 to £1 million for the next two years and a new ‘Structures and Buildings Allowance’ both of which are aimed to boost capital expenditure by local companies.
The range of increased tax reliefs and generous spending measures announced in this Budget were intended to mark ‘austerity coming to an end’ in light of significantly improved public finance figures from the OBR. Unsurprisingly, however, there were no long-term plans and many view this budget as a sticky plaster to get the UK through the Brexit negotiations. While there remains much uncertainty over the next few months, this Budget does give moral support to those businesses already planning for a ‘no deal’ scenario that the government is doing the same! Their plans include an additional £0.5 billion (to the existing £3.7 billion) allocated to government departments to prepare for Brexit and confirmation that an ‘emergency budget’ may be required in the Spring in the event of a ‘no deal’ Brexit.