Autumn Budget 2018

  • Oct. 30, 2018
  • MTD
This is a basic guide. It is an introduction only and should not be used as a definitive guide, since individual circumstances may vary. Specific advice should be obtained, where necessary.
 

You can read the individual measures and details of some of the numerous consultations below.

Rates and allowances

                                     2019/20      2018/19
                                        £               £
Income tax rates - (non-dividend income)
0% tax-savings rate only Up to 5,000 Up to 5,000
20% basic rate tax   12,501 to 50,000 11,851 to                                                         46,350
40% higher rate tax 50,001 to 150,000 46,351 to                                                          150,000
45% additional rate tax Above 150,000 Above                                                  150,000

The Scottish government budget will take place on 12 December 2018.

The Welsh government final budget will be debated on 18 December 2018.

Dividend allowance
The tax-free dividend allowance is unchanged at £2,000.

Stamp Duty Land Tax: relief for first time buyers
The chancellor announced relief up to the value 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

Corporation tax
The corporation tax rate will remain at 19%.

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
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. The final period exemption 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.

VAT                                        2019/20 2018/19
                                                  £               £
Standard rate                          20%           20%
Registration threshold          85,000       85,000
Deregistration threshold       83,000       83,000

VAT thresholds as previously announced will remain unchanged.

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.

Business rates
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.

Apprenticeships
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.

R&D
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.

IHT
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    Finance cost
                          allowed in full     allowed only 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%

IR35
The chancellor announced the extension of IR35 to the public 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.

Employment allowance reform

From April 2020, this will be limited to employers with an employer NICs bill below £100,000 in the previous tax year.

Entrepreneurs’ Relief
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.