Autumn Budget Summary
Friday, 02 November 2018
Autumn Budget Summary
The Chancellor delivered his Budget speech this week and what a speech it was! There were new taxes introduced, threshold amendments, brilliant-one liners and more.
During his speech, Hammond said, “I’m not Stephen Fry, there is no audiobook, you’re going to have to read it!”
Read it we have, and I now detail below a summary of the main points.
Personal income tax
- From April 2019, the personal allowance will increase to £12,500.
- From April 2019, the basic rate band will increase to apply to the first £37,500 of taxable income.
- NIC thresholds for employers and employees rise from £162 to £166 per week (£8,632 per year).
- The Upper Earnings Limit will increase to £962 per week (£50,000 per annum where a single annual calculation is carried out).
- Class 2 NIC will rise to £3 per week for 2019/20.
Capital gains tax (CGT)
- The CGT Annual Exemption will rise to £12,000 from 2019/20. (Where applicable, the trust rate is £6,000.)
- Only or main residence (OMR) and lettings relief is being restricted:
- The final period exemption will be reduced from 18 months to 9 months as of April 2020.
- Also from April 2020, lettings relief will be restricted to periods during which an owner was in ‘shared occupancy’ with a tenant.
- From 6 April 2020, all CGT due on UK residences will become payable and reportable within 30 days of completion.
- Entrepreneurs’ relief has been tightened slightly:
- Firstly, the minimum share holding period has been increased to 24 months from 12 months for disposals made on or after 6 April 2019.
- Also, the claimant must have a 5% interest in both the distributable profits and the net assets of the company prior to sale.
One of the stand-out points was that very little happened here.
The lifetime allowance has increased with inflation to £1,055,000.
- The £40,000 annual allowance and the taper thresholds have all remained the same and fully intact.
- Annual investment allowance (AIA) will increase to £1,000,000 for two years from 1 January 2019.
- Special rate pool WDAs will reduce to 6% from 8% from April 2019. (Hybrid rates will need to be calculated for clients with non-April year ends.)
- Enhanced capital allowances for energy efficient technologies will be abolished from April 2020.
- Enhanced capital allowances for electric vehicle charge points will continue to April 2023.
- A new structures and buildings allowance of 2% will be introduced for non-residential property where the contracts for the construction works are entered into on or after 29 October 2018.
- The Budget document confirms that the CT rate will decrease to 17% from April 2020.
- Tax relief for purchased goodwill is making a limited comeback.
- A limit equivalent to three times the company’s PAYE & NIC liability will be introduced with regards to Research & Development (R&D) tax credit claims for small and medium-sized enterprises.
- The applicability of the £3,000 employment allowance for employers NIC liability will be restricted to employers with a liability below £100,000 in the previous tax year.
- Charities can currently make a small amount of ‘non-purpose’ trading activity profit – these limits have been increased.
- Stamp Duty Land Tax (SDLT) first-time buyers relief: the property value limit has been increased to £500,000.
- Annual Tax on Enveloped Dwellings (ATED) bandings and charges are proposed to line with inflation.
- Partnerships will soon be eligible to join a VAT group with companies under common control.
- Significant changes will be made to the VAT treatment of ‘face value vouchers’ that are issued on or after 1 January 2019.
- The company car and fuel benefit chargeable percentages have increased by 3% to encourage people to make ‘greener choices’.
- The IR35 rules will be extended to ‘large and medium-sized’ engagers within the private sector, with the onus of determining employment status being on the engager.
- A new tax called Digital Services Tax (DST) will apply to online marketplaces, search engines and social media from April 2020 in a bid to reflect the value they derive from UK users.
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