After weeks of speculation, Chancellor Philip Hammond has now revealed his Autumn Budget 2018 – one which has been keenly anticipated by the insurance industry.
For weeks we’ve seen numerous calls that there be no further hikes in Insurance Premium Tax – IPT – with everyone from Zurich Municipal to Bupa making statements on the issue (read articles on the Bupa campaign and the Zurich campaign), while Aviva also highlighted how SMEs could be impacted. But what did the Chancellor actually deliver?
There was no change either upwards or downwards to Insurance Premium Tax in today’s Budget – welcome news for those in the industry who have been urging a freeze on the tax.
The Chancellor described the economy as being at a “defining moment,” and said the “era of austerity is finally coming to an end.”
He said the UK is at a “pivotal moment” in the Brexit talks, adding that if we get it right, there will be a “double Brexit dividend.”
Having already allocated £2.2 billion to departments for Brexit preparations, Hammond highlighted a further £1.5 billion that was set aside in the Autumn Budget last year and allocated for 2019-20. That sum will be increased to £2 billion, with the Chief Secretary announcing allocations to individual departments in the coming week, he said.
The Chancellor put regular pay growth at 3.1%, calling it the strongest level in almost a decade. Inflation is forecast to average 2% next year, he said, with the Office for Budget Responsibility forecasting “sustained real wage growth in each of the next five years.”
Hammond also announced a £695 million initiative to help small firms hire apprentices. He said the amount that small firms have to pay to do so will be halved.
The Chancellor revealed that he will extend the rules on IR35 to the private sector, but delay the changes until April 2020. Then, they will only apply to large and medium-sized businesses.
A new UK digital services tax was announced, which Hammond said would raise £400 million. Only tech giants that generate £500 million or more in revenue will pay, under a scheme will come into effect in April 2020. The Chancellor said a global agreement on the taxation of tech giants would be best, but said that progress towards one has been “painfully slow.” If an agreement does come about before April 2020, Hammond said he may abandon his plan.