In his final budget before the UK leaves the EU, the Chancellor’s speech painted a positive picture of the UK economy. Demonstrating his ‘austerity is coming to an end’ message with several spending announcements ahead of departmental reviews, he was keen to show that the hard-times of the last eight years have paved the way for a brighter future. He emphasised that his approach remained balanced and that whilst investment would increase, ‘discipline will remain.’
Our summary below aims to cover the main points that we think will be of interest to our clients and their families and is based on today’s announcements in the media and online. We will provide further information and analysis in the coming days as more details of the government’s measures are released.
The minimum qualifying period for Entrepreneurs Relief (ER) will increase from 12 to 24 months
Annual Investment Allowance (AIA) will increase to £1 million for 2 years from January 2019 for all qualifying investment in plant and machinery
Structure and Building Allowance (SBA) has been introduced for new non-residential structures and buildings. Contracts for the physical construction works entered into on or after 29 October 2018 will be eligible for a 2% capital allowance
Capital allowances rate for the special rate pool will be reduced from 8% to 6% from April 2019
Loss relief rules will be amended further to ensure relief for carried-forward losses are in line with what the government intended
From 1 April 2020, the government will restrict the proportion of annual capital gains that can be relieved by brought-forward corporate capital losses to 50% for large companies
Charities small trading exemption limit has been increased to £80,000 from £50,000
New tax to be introduced on the manufacturing and importing of plastics that contain 30% or less recycled material from April 2022
A restriction on the amount of Research and Development (R&D) tax credits you can claim from surrendering losses to HMRC (based on PAYE liability) has been re-introduced
Digital services tax (DST) at a rate of 2% on the on the revenues of certain digital businesses will commence from April 2020. It will not be an on-line sales tax and it is intended to target tech giants not tech start-ups
Business rates bills for retail properties with a rateable value below £51,000 will be cut by one-third for 2 years from April 2019, subject to state aid limits
HMRC to return to being a preferential creditor in business insolvencies
Employment allowance – employers with NIC bill in excess of £100,000 will no longer be eligible for the £3,000 allowance from April 2020
Headline rate of the minimum wage payable to employees aged 25 and over will increase to £8.21 from April 2019 with corresponding rises for younger staff
Apprenticeship funding will increase from 90% to 95%
Off-payroll working rules (IR35) that currently apply to the public sector will be extended to all large and medium-sized businesses from April 2020. The smallest 1.5 million businesses will be excluded from this change which is expected to deliver £1.3 billion in tax revenue.
Personal allowances and the higher rate threshold will increase from April 2019 to £12,500 and £50,000 respectively – a year ahead of schedule
From April 2020, the government will reform letting relief so that it only applies where the owner is in shared occupancy with the tenant. The final 18-month tax free period will be reduced to 9 months
Stamp Duty Land Tax will be abolished for first time buyers entering into a qualifying shared ownership arrangement on properties with a value up to £500,000
If you have any immediate concerns or queries about the impact of the Budget on your tax affairs, please contact WMT’s Anne-Maree Dunn.