The chancellor increased personal tax allowances for individuals and increased the Annual Investment Allowance however he also restricted the scope of several valuable tax reliefs, including Capital Gains tax (CGT) Entrepreneurs' Relief and Private Residence Relief and R & D as well as introducing the off-payroll working rules to medium and large companies in the private sector.
- This contains a summary for SMEs of all new announcements and some previously announcements have been reconfirmed.
- Not all measures will be included in Finance Act 2019, as some are being legislated later or by secondary instrument.
Personal allowances and tax rates
From April 2019
- The Personal Allowance increased to £12,500.
- The basic rate limit will be increased to £37,500
- These increases come a year earlier than previously announced.
National Living Wage
- From April 2019 the National Living Wage will increase from £7.83 an hour to £8.21. This will benefit around 2.4 million workers, and is a £690 annual pay rise for a full-time worker.
See National Living Wage rates
Self Funded work-related training
- No changes following consultation. Instead, the government is launching the National Retraining Scheme and skills pilots 'to help those in work, including the self-employed, develop the skills they need to thrive.'
See Self-funded work-related training: condoc outcome
Voluntary tax returns
With retrospective effect to the commencement of self-assessment, 6 April 1996:
- Income tax, Capital Gains tax and Corporation tax voluntary tax returns are to be put on a statutory basis.
- This will apply to companies, individuals, partnerships and trusts.
Social Investment Tax Relief review
Early 2019
- The government will publish a call for evidence on the Social Investment Tax Relief. The review will consider why take up of the scheme is lower than anticipated, and the design and targeting of the relief.
- See Social Investment Tax Relief
Enterprise Investment Scheme (EIS) knowledge-intensive fund structure
As previously annoucned draft legislation for consultation in summer 2019 to amend the Enterprise Investment Scheme (EIS) rules for approved funds to:
- require approved funds to focus on investments in knowledge-intensive companies;
- give funds a longer period over which to invest fund capital; and,
- allow investors in approved funds to set their income tax relief against liabilities in the year before the fund closes.
See EIS: Enterprise Investment Scheme
Employees
Off-payroll working & IR35
- From April 2020: the off-payroll working rules apply to medium and large company engagers.
See Treasury Policy paper: Off-payroll working & IR35
Employers NICs allowance
- Employment Allowance (EA) to support smaller businesses, from April 2020 the government will restrict access to employers with an employer National Insurance contributions (NICs) bill below £100,000 in their previous tax year.
See Budget 2018: Employment allowance
Short Term Business Visitors (STBVs)
- Following a consultation on the tax and administrative treatment of STBVs from overseas branches of UK headquartered companies, the government will widen eligibility for the STBV Pay As You Earn (PAYE) special arrangement and extend its deadlines for reporting and paying tax. This will reduce administrative burdens on UK employers with effect from April 2020.
Company vehicles
From 6 April 2019
- The flat-rate van benefit charge will increase to £3,430, the multiplier for the car fuel benefit charge will increase to £24,100, and the flat-rate van fuel benefit charge will increase to £655.
Land & Property
Rent-a-Room relief
- The proposed Shared occupancy test for Rent-a-Room relief has been abandoned following consultation on draft legislation this summer. This is 'to maintain the simplicity of the system'. The measure is removed from Finance Bill 2018-19.
- The chancellor has instead announced changes to CGT Private Residence Relief letting relief instead: these will create a shared occupancy test for CGT, see CGT Private Residence Relief, and Budget 2018 announcement (in CGT below).
Business rates and Holiday lets
- The government will consult on the criteria under which self-catering and holiday lets become chargeable to business rates rather than council tax.
Business rates public lavatories relief
- 100% business rates relief for all public lavatories to help keep these important local amenities open.
Business rates local newspaper discount
- The government will continue the £1,500 business rates discount for office space occupied by local newspapers in 2019-20
SDLT charge for non-residents
- The government will publish a consultation in January 2019 on a SDLT surcharge of 1% for non-residents buying residential property in England and Northern Ireland.
Stamp Duty Land Tax (SDLT) and first-time buyers relief
Backdated to 22 November 2017 and applying to transactions on or after 29 October 2018:
- Relief extended in England and Northern Ireland so that all qualifying shared ownership property purchasers can benefit, whether or not the purchaser elects to pay SDLT on the market value of the property.
- Those eligible who have not previously claimed first-time buyers relief will be able to amend their return to claim a refund.
See Budget 2018 SDLT higher rate for additional dwellings
Offshore/Land and Property
Non-resident landlord companies
See Companies (below)
Non-resident Capital Gains Tax (NRCGT)
As previously announced
From 5 April 2019
- The NRCGT regime extend to disposals of all UK land and property, i.e. both commercial and residential
- It will also apply to indirect disposals of interests in property rich entities, i.e. a shareholding in a property investment company or partnership
- Payment of any CGT due will be made within 30 days of conveyancing.
Income, claims and reliefs
Pensions
From April 2019
- The lifetime allowance for pension savings will increase in line with CPI to £1,055,000.
ISAs
From April 2019
- The adult ISA annual subscription limit for 2019-20 will remain unchanged at £20,000.
- The annual subscription limit for Junior ISAs for 2019-20 will be uprated in line with CPI to £4,368
Child Trust Funds
From April 2019
- The annual subscription limit for Child Trust Funds will be uprated in line with CPI to £4,368.
Royalties Withholding Tax
From 6 April 2019, with anti-forsestalling measures applying from 29 October 2018
- Following consultation, withholding tax to apply to royalty payments made by connected parties to non-UK residents for the exploitation of Intellectual Property (IP) (or certain other rights) in the UK.
See Royalties Withholding tax: consultation outcome
Cryptoassets
- The govenment's Cryptoassets Taskforce has made its final report. Cryptocurrencies are not recognised as currencies.
- Taxing Cryptoassets was outside the remit of the the government's CryptoassetsTaskforce report, HMRC will update their guidance on this topic in 2019.
See Cryptoassets Taskforce Finance Report: Highlights
Capital Gains Tax (CGT)
CGT Private Residence Relief
From April 2020
- The government will reform the conditions for CGT Private Residence relief's 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.
- There will be no changes to the 36 months final period exemption available to disabled people or those in a care home.
See Budget 2018: Private Residence Relief
CGT Entrepreneurs' Relief
From 29 Oct 2018
- There are two changes to 5% the qualifying conditions for relief. The claimant must throughout the relevant period, have at least a 5% interest in not
- only the company's voting rights, but also
- the distributable profits of the company and
- the assets available for distribution to equity holders in a winding up
From April 2019
- The minimum period throughout which certain conditions must be met to be eligible for Entrepreneurs Relief from one year to two years. Where the business ceased before 29 October 2018 the existing one year holding period continues to apply.
- Shareholders are protected from a loss of ER due to a commercial fundraising event causing their shareholding to fall below 5%. There are two different elections:
- Allow a 'dry' gain to be tiggered or
- Defer the gain to a future actual disposal
See Budget 2018: Entrepreneurs' Relief
CGT Annual exempt amounts
- From April 2019: The annual exempt amount increases to £12,000 for individuals and personal representatives and £6,000 for trustees of settlements.
Non-residents' CGT, see Overseas
Inheritance tax
- Changes to the residence nil rate band for deaths on or after 29 October 2018 where downsizing relief applies and where there has been a gift with reservation of benefit.
See Budget 2018: IHT: changes to the main residence nil rate band
Companies
Research & Development Relief
- From April 2020 the amount of R & D relief that an SME may claim is to be capped at three times its PAYE and NICs liability for the year.
See Budget 2018: Preventing abuse of R & D by SMEs
Intangible fixed assets regime
From April 2019
- To reintroduce a targeted relief for the cost of goodwill (the amount paid for a business that exceeds the fair value of its individual assets and liabilities) in the acquisition of businesses with eligible intellectual property.
From 7 November 2018
- Alter the regime's de-grouping charge rules so that no charge will arise on a share disposal that qualifies for SSE.
Stamp Duty:transfers to a connected company
From 29 October 2018
A new market value rule will apply in policy document 'Stamp Duty, Stamp Duty Reserve Tax transfers of listed securities and connected parties'.
See Budget 2018: Stamp Duty connected companies
Digital Services Tax: large digital platforms
- From April 2020, large social media platforms, search engines and online marketplaces will pay a 2% tax on the revenues they earn which are linked to UK users.
See Budget 2018: Digital Services Tax
Corporate capital loss restriction
- The government will bring the tax treatment of corporate capital losses into line with the treatment of income losses.
- From 1 April 2020, the government will restrict the proportion of annual capital gains that can be relieved by brought-forward capital losses to 50%.
- See Losses: trading and other losses
Corporate Interest Restriction: changes to lease accounting
Accounting periods beginning on or after 1 January 2019.
- Companies adopting IFRS16 or the equivalent FRS101 keep the distinction between operating leases and finance leases for CIR purposes but with modifications requiring an IFRS16 lessee to classify their leases between the two categories for CIR purposes.
- See Changes to lease accounting
Non-resident landlord companies
From April 2019
- Non-residents CGT extends to all disposals of UK land and property
See Budget 2018: Non-resident CGT changes
From April 2020 (as previously announced)
- Non-UK resident companies that carry on a UK property business, or have other UK property income, will be charged to Corporation Tax.
See Budget 2018: UK property income of non-UK resident companies
Offshore receipts in respect of intangible property (previously Royalties Withholding Tax)
- As announced at Autumn Budget 2017, the government is introducing legislation in Finance Bill 2018-19 to tax income from intangible property held in low-tax jurisdictions to the extent that it is referable to UK sales.
See Royalties Withholding tax: Consultation Outcome
Hybrid Capital Instruments
From: tba
- Certain corporate debt instruments (known as hybrid capital) have some equity-like features. New rules will be introduced for the taxation of such instruments, to ensure that they are taxed in line with their economic substance.
Diverted profits tax
- Measures to ensure that the rules work as intended some applying from November 2018
Change to the definition of 'Permanent Establishment'
From 1 January 2019:
- The exempt activities rules at s1143 CTA 2010 will not apply when the business activity has been artificially fragmented to avoid creating a permanent establishment and taxing rights over the profits of that permanent establishment will be given to the jurisdiction where it is located.
See Budget 2018: Corporation tax: Change to the definition of permanent establishment
Capital Allowances
Annual Investment Allowance (AIA)
From 1 January 2019 until 31 December 2020
- AIA increased to £1 million for all qualifying investment in plant and machinery.
See Budget 2018: Annual Investment Allowance increase
Structures and buildings allowance (SBA)
From 29 October 2018
- New non-residential structures and buildings will be eligible for a 2% capital allowance where all the contracts for the physical construction works are entered into on or after 29 October 2018.
See Budget 2018: Capital allowances for Structures and Buildings
Plant & machinery: cost of allteration of land
From 29 October 2018
- Claims for capital allowances on expenditure for the alteration of land to enable the installation of plant and machinery will only be allowed where the plant and machinery itself qualifies for allowances.
See Budget 2018: Capital allowances: the costs of altering land
Special rate reduction (8% to 6%)
From April 2019
- The special rate for qualifying plant and machinery assets will be reduced from 8% to 6% to more closely match average accounts depreciation.
See Budget 2018: Special rate pool allowance reduction
Enhanced Capital Allowances (ECAs)
From April 2020
- The government will end ECAs and First Year Tax Credits for technologies on the Energy Technology List and Water Technology List.
See Budget 2018: End of energy efficient capital allowances
Enhanced Capital Allowances (ECAs) for electric vehicle charge points
- The government will extend the ECA for companies investing in electric vehicle charge points to 31 March 2023 (companies) and 5 April 2023 (income tax)
See Budget 2018: FYA for electric charge points
Penalties, interest and compliance
From Royal Assent of Finance Bill 2018-19
Amendments to the proposed late payment, repayment and penalties', to ensure that they apply as intended across various taxes.
See Budget 2018: Changes to late payment interest
Voluntary tax returns
To apply retrospectively from April 1996
- A tax return submitted voluntarily is a legally valid return
See Budget 2018: Voluntary tax returns
Extension of Offshore Time Limits
From date of Royal Assent of Finance Act 2019
- Following consultation an increase in the time limit for offshore non-compliance to 12 years for Income Tax, CGT and IHT.
- The timelimit for deliberate behaviour remains 20 years.3
Charities
From April 2019, the government will:
- Increase the upper limit for trading that charities can carry out without incurring a tax liability from £5,000 to £8,000 where turnover is under £20,000, and from £50,000 to £80,000 where turnover exceeds £200,000
- Allow charity shops using the Retail Gift Aid Scheme to send letters to donors every three years when their goods raise less than £20 a year, rather than every tax year
- Increase the individual donation limit under the Gift Aid Small Donations Scheme to £30, which applies to small collections where it is impractical to obtain a Gift Aid declaration. See Budget 2018: GASDS changes.
VAT
Registration thresholds
- No changes to the registration thresholds for two years until April 2022. Further announcements once Brexit is agreed.
See VAT registration threshold: condoc outcome
Vouchers
- As previously announced the government will legislate in Finance Bill 2018-19 to implement EU legislation which ensures that the correct amount of VAT is charged on what the customer pays, irrespective of whether payment is with a voucher or other means of payment.
See Budget 2018: VAT & Vouchers
VAT reverse charge: building and construction services
From 1 October 2019
- As announced at Autumn Budget 2017, the introduction of a VAT domestic reverse charge to prevent VAT losses through so-called ‘Missing Trader’ fraud.
See Budget 2018: VAT reverse charge anti-avoidance
VAT and higher education
- Bodies registered with the Office for Students in the Approved (fee cap) category will be enabled to exempt supplies of education.
Alternative method of VAT collection: ‘split payment’
- The government is looking at a split payment model to reduce online VAT fraud by third country sellers and improve how VAT is collected on cross-border e-commerce.
Insurance sector anti-avoidance
From 1 March 2019
- Anti-avoidance measures to counteract offshore ‘looping’ in the insurance sector.
See Budget 2018: VAT: insurance sector
Anti- avoidance
Tax Abuse and Insolvency
From April 2020
- New rules to give HMRC priority over other unsecured creditors where a company goes into insolvency with unpaid taxes collected from customers and employees such as VAT, PAYE, CIS deductions and Employee NIC.
From Royal Assent of Finance Bill 2019-20
- New rules to allow HMRC to make directors and other persons involved in tax avoidance, evasion or phoenixism jointly and severally liable for company tax liabilities, where there is a risk that the company may deliberately enter insolvency.
See Budget 2018: Protecting your taxes in insolvency
