As previously announced, these were the main themes of the Chancellor Phillip Hammond’s third budget but what we were waiting to hear was where the extra money was going to come from? Had he found a “Magic Money Tree”, or would tax and borrowing have to increase?
We now know that the extra money will come from better than expected economic growth and consequential increased tax revenues. But there may have to be a Spring 2019 Budget if Brexit negotiations don’t go to plan….
PERSONAL ALLOWANCE AND HIGHER RATE LIMIT INCREASED EARLY
The Government’s manifesto pledge back in 2015 was that the personal allowance would rise to £12,500 in 2020 and the higher rate tax threshold to £50,000. However, the Chancellor has decided to bring forward these increases one year early from 2019/20, taking an estimated 1 million taxpayers out of higher rate tax.
Note that up to 10% of the personal allowance (£1,250 from 6 April 2019) may be transferred from one spouse or civil partner to the other if unused and the transferee is a basic rate taxpayer. As announced last year, this transfer is now available on behalf of deceased spouses and civil partners.