The Chancellor has presented his Budget on 29 October 2018. Below you can find a snapshot of changes announced.
Rates and allowances
Personal allowance will increase to £12,500 for tax year 2019/20. The basic rate limit will increase to £37,500, which means that you can earn up to £50,000 before paying tax at higher rates.
There were no changes in the rates of tax announced.
Lifetime limit for pension will be increased to £1,055,000.
The tax-free dividend allowance will stay without a change at £2,000 per year, the rates for dividend tax has not been changed too.
Stamp Duty Land Tax: relief for first time buyers
The chancellor announced relief up to the value of the property of £500,000 back-dating from 22 November 2017, so that those eligible who have not previously claimed first-time buyers’ relief will be able to amend their return to claim a refund. This measure does not apply in Scotland or Wales.
The corporation tax rate will remain at 19% and it is in line with the plans to lower the rate in financial year 2020 to 17%.
Annual investment allowance
Companies will be able to claim £1m as AIA for expenditure incurred from 1 January 2019 to 31 December 2020.
Structure and Building allowance
A relief of 2% will be available for expenditure on non-residential buildings, for which construction contracts are entered into after 29 October 2018. Qualifying costs relate to construction, improvement, conversion, including demolition costs and land alterations costs.
CGT letting relief and final period exemption
CGT annual exemption will be increased to £12,000 for 2019/20.
From April 2020 the government will reform lettings relief so that it only applies in circumstances where the owner of the property is in shared occupancy with the tenant (i.e. lodgers only).
The final period exemption for Private Residence Relief will also be reduced from 18 months to 9 months.
Making tax digital
There were no announcements on MTD. HMRC is aiming to introduce MTD for VAT in April 2019.
Registration limit for VAT was frozen at £85,000 and it is not expected to change until 31 March 2022. The deregistration limit stays the same at £83,000 as well.
Phoenix and insolvent companies
From 6 April 2020, the government will change the rules when a business enters insolvency HMRC will be a preferential creditor. It has also announced that directors and other persons involved in tax avoidance, evasion or phoenixism will be jointly and severally liable for company tax liabilities.
The threshold for Small Business Rate Relief (SBRR) has been raised to include properties with a rateable value of up to £51,000. The Treasury has announced that the bills of those below this threshold will be reduced by a third, starting from April 2019 for a period of two years.
SMEs will now only pay 5% towards the cost of an apprentice’s training costs, down from the previous 10% co-investment rate. This change is expected to come into effect from April 2019.
Taxation of trusts
The taxation of trusts will be subject to a consultation and review.
Research & Development
From 1 April 2020, the amount of payable R&D tax credit that a qualifying loss-making company can receive in any tax year will be restricted to three times the company’s total PAYE and NICs liability for that year.
The Nil-rate band remains at £325,000. The residence nil-rate band for deaths in the following tax years will be:
- £100,000 in 2017 to 2018
- £125,000 in 2018 to 2019
- £150,000 in 2019 to 2020
- £175,000 in 2020 to 2021
Interest relief for landlords
Landlords will be able to obtain relief as follows:
|Finance cost allowed in full||Finance cost allowed at basic rate|
|Year to 5 April 2018||75%||25%|
|Year to 5 April 2019||50%||50%|
|Year to 5 April 2020||25%||75%|
|Year to 5 April 2021||0%||100%|
The chancellor announced the extension of IR35 to the private sector. It has been recognised with issues with CEST and recent cases that changes require further thought with a resulting implementation date of April 2020. The reform will apply to large and medium sized businesses only.
From 1 April 2018 the charges for the annual tax on enveloped dwellings (ATED) will be increased by 3%. Returns for 2018/19 are to be filed electronically.
|Annual Tax on Enveloped Dwellings (ATED)||2019/20||2017/18|
|More than £0.5m but not more than £1m||£3,500||£3,600|
|More than £1m but not more than £2m||£7,050||£7,250|
|More than £2m but not more than £5m||£23,550||£24,250|
|More than £5m but not more than £10m||£54,950||£56,550|
|More than £10m but not more than £20m||£110,100||£113,400|
|More than £20m||£220,350||£226,950|
Employment allowance reform
From April 2020, the employment allowance of £3,000 will be limited to employers with an employer NICs bill below £100,000 in the previous tax year.
Legislation will be introduced in Finance Bill 2018-19 for disposal made on or after 6 April 2019, to increases this minimum period throughout which certain conditions must be met to be eligible for Entrepreneurs Relief from one year to two years.
It should not be used as a definitive guide, since individual circumstances may vary. Specific advice should be obtained, where necessary.