The Budget

Last month, I made some predictions about what I thought might be in the Budget on October 29.

My prediction that the Chancellor would cut the tax relief on pension contributions turned out to be completely wrong – he left the tax relief unchanged, but at an annual cost of around £40 billion I cannot believe it will remain at current levels for much longer.

My second prediction, that he would restrict Entrepreneurs’ Relief on business disposals, was partly right – he increased the period for which the qualifying conditions must be satisfied from one year to two years and increased the minimum shareholding that must be held when the disposal is of shares.

The difficulty of predicting what a Chancellor will do is one thing; the difficulty for the Chancellor of predicting what the economy will do is quite another.

I do not envy Mr Hammond the job of setting tax and spending plans at a time of such uncertainty in both the global economy and – because of Brexit, the financial consequences of which we still do not know – the UK economy.

Because of this uncertainty, there were few major tax changes in the Budget and the Chancellor left open the possibility that next year’s Spring Statement could be more of a Budget if conditions demanded.

You can find a short summary of the main Budget provisions on A C Mole and Sons’ website, but there are two reliefs I would like to highlight here.

The first is an increase in the Annual Investment Allowance for businesses investing in equipment, plant and machinery.

The allowance will be increased from £200,000 to £1m for two years from 1 January 2019 to 31 December 2020. The rules are, however, complicated and you should take advice before you commit to a purchase as the timing, depending on your accounting year end, can be critical.

The second is a new Structures and Buildings Allowance, which will give relief for the cost of non-residential commercial buildings and structures (such as factories, offices, warehouses, bridges and tunnels).

The allowance will be given at 2% a year for eligible expenditure incurred where all the contracts for the construction works were entered into on or after 29 October 2018. Expenditure on eligible integral features and fittings will continue to qualify for writing down allowances and the Annual Investment Allowance.

In my experience many businesses underclaim capital allowances, so advice is always worth taking – and with these two changes, more so than ever.

Paul Aplin is a tax partner with A C Mole & Sons and President of the Institute of Chartered Accountants in England and Wales; you can follow him on Twitter at @PaulAplinOnTax or email him at