With Brexit dangling over him like the sword of Damocles, Chancellor Philip Hammond presented his third Budget to a country still waiting, after more than two years, to find out what its uncertain future holds. It sounds rather like preparing a budget for a shop when you have no idea whether it is actually going to be open for business (and we all know what’s been happening to high street shops lately).
Hammond must have made a few guesses about the future to prepare his Budget and he certainly seemed to think he had room for plenty of optimism as he claimed we had reached a ‘turning point’ with ‘austerity coming to an end’.
However, whilst he promised that ‘Fiscal Phil says Fiscal Rules OK’, he also warned that next spring could see a ‘Full Fiscal Event’ if things did not turn out as planned. In other words, if he’s got it wrong, we could see what effectively amounts to another Budget next March – with perhaps a few of his customary U-turns.
Meantime, since this is his third Budget, let’s hope his guesses prove to be lucky ones!
Perhaps the biggest announcement came at the end of the Budget speech. For years we’ve been watching to see whether the increases in the personal allowance and higher rate threshold which we were promised by 2020/21 would actually come to fruition. In fact, those increases are now to apply from April 2019, but will apply for both the 2019/20 and 2020/21 tax years, as follows:
The personal allowance increases to £12,500. This benefits all UK taxpayers.
The basic rate band increases to £37,500, producing a higher rate threshold of £50,000. This increase does not apply to Scottish Taxpayers and we await the Scottish Budget in December to find out their fate.