UK Budget 2018 Highlights
The UK Budget 2018 was presented on October 29, 2018. We give below the key highlights of the budget:
- Digital Services Tax (DST):
A new 2% digital services tax on revenue that can be linked to the UK users will be applicable on big technology companies** from April, 2020.
** Large social media platforms, search engines and online marketplaces, that are profitable and have global revenue above GBP 500 million.
- Employment Allowance (EA):
Employers that have National Insurance contributions (NICs) bill below £100,000 in their previous tax year will only be eligible for the EA. This allowance provides relief of up to £3,000 to businesses. Presently even the large employers are entitled to this benefit.
- R&D tax credit for SMEs:
The amount of R&D tax credit benefit for qualifying loss-making small company in any tax year will be subject to the cap of three times of company’s total PAYE and NICs liability for that year from April, 2020.
- Apprenticeship levy:
Contribution to apprentice levy by small companies will be reduced from 10% to 5%. The effective date for the same is yet to be announced.
- The Personal allowance threshold will increase from £11,850 to £12,500. This is the threshold below which no tax is payable by the individuals. In case of the 40% tax rate slab, the threshold will increase from £46,350 to £50,000. Both changes will be effective from April 2019.
- Minimum wages will increase from £7.83 per hour to £8.21 per hour from April 2019.
The government is providing £500 million of additional funding for departments to prepare for Brexit for 2019-20. This is on top of the £1.5 billion already announced for that year.
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