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BUDGET HIGHLIGHTS - OCTOBER 2018
PERSONAL ALLOWANCE & HIGHER RATE THRESHOLDS TO RISE FROM APRIL 2019
The Chancellor confirmed that the government’s target of reaching a tax-free Personal Allowance of £12,500 and a higher rate tax threshold of £50,000 by 2020 will be met one year early, with those amounts being introduced from April 2019. This is a welcome boost to the current Personal Allowance of £11,850 and higher rate tax threshold of £46,350.
ANNUAL INVESTMENT ALLOWANCE INCREASED TO £1M FROM JANUARY 2019
The Annual Investment Allowance allows businesses tax relief on 100% of qualifying expenditure on plant and equipment, and is currently set at £200,000 per annum. However, in a welcome measure, this will be extended to £1m per annum for a 2 year period from January 2019 to December 2020.
1/3RD RATES DISCOUNT FOR HIGH STREET RETAIL PROPERTIES FROM APRIL 2019
In a bid to help independent retailers (shops, cafes etc) on our high streets, a one third business rates discount will be given on retail properties with a rateable value below £51,000 for a 2 year period, commencing April 2019. This is expected to benefit up to 90% of retail properties.
ENTREPRENEURS RELIEF QUALIFYING OWNERSHIP PERIOD EXTENDED TO 2 YEARS
From 6 April 2019, the minimum period that the conditions must be met to qualify for Entrepreneurs Relief will be extended from 12 months to 2 years. With Entrepreneurs Relief giving a 10% Capital Gains Tax rate on the sale of qualifying business assets, including shares in unquoted companies, those considering a business sale may now need to plan further ahead
VAT REGISTRATION THRESHOLD FROZEN AT £85,000 UNTIL 2022
Following a call for evidence on the design of the UK VAT threshold (which is higher than most other countries), the government have decided to freeze the registration threshold at £85,000 until 2022. With Making Tax Digital for VAT arriving in April 2019, which only applies to VAT registered businesses with a turnover above the VAT registration threshold, this provides greater certainty.
IR35 REFORM TO HIT PRIVATE SECTOR IN 2020, BUT SMALL ORGANISATIONS EXEMPT
Following changes to the operation of the off-payroll working rules (aka IR35) in the public sector, The Chancellor announced that similar changes will be introduced in the private sector from April 2020, shifting the onus for applying the rules from individual contractors to the end user engaging the worker. However, he confirmed that there will be an exemption for smaller organisations.
NATIONAL LIVING WAGE INCREASED TO £8.21 PER HOUR FROM APRIL 2019
While not referred to in the speech itself, the Budget document confirmed that the National Living Wage for workers aged 25 and over is set to increase from the current level of £7.83 per hour to £8.21 per hour from April 2019, an increase of almost 5%. It is set to reach £9 per hour by 2020.
2% DIGITAL SERVICES TAX ON DIGITAL PLATFORMS ARRIVES IN APRIL 2020
In a measure designed to reduce tax leakage where multinational companies operate online platforms and pay little or no tax in the UK, a new 2% digital services tax will be levied on revenues from the UK market in relation to search engines, social media platforms, and online marketplaces
CAPITAL GAINS TAX PRIVATE RESIDENCE RELIEF – NEW RESTRICTIONS ADDED
It was announced that, with effect from April 2020, the current extension of private residence relief to periods where a private residence is let out (known as ‘letting relief’) will only apply where the owner is in shared occupancy with the tenant. This represents a major change. In addition, the exemption for the final 18 months of ownership will be halved to the final 9 months of ownership
NEW 2% STRUCTURES AND BUILDINGS ALLOWANCE
The Chancellor announced a new structures and buildings capital allowance, which will be set at a rate of 2% per annum, will apply to all newly constructed non-residential buildings and structures where construction works commenced on or after Budget Day. This a welcome measure, following the abolition of both the Industrial Buildings and Agricultural Buildings Allowances back in 2011.
