CBW's Michaela Lamb highlights the key announcements in Hammond's Autumn Budget.
Personal allowance and rates
From April 2019, the personal allowance will increase to £12,500 and the basic rate band will be £37,500, taking the total earnings allowed before reaching the higher rate threshold to £50,000. This is happening earlier than planned and will make basic rate tax payers £130 per year better off and higher rate tax payers £600 per year better off. These levels will remain frozen in 2020/21.
Dividend and savings allowances and the saving rate
No changes to any of these allowances were announced in the budget.
The ISA limit remains unchanged at £20,000 for 2019/20.
Non-Residents and Non-Doms
SDLT Surcharge Consultation
The Government will be consulting on the possibility of introducing a 1% surcharge for non-residents purchasing UK residential property from January 2019.
VCTs, EIS and SEIS
No major changes to the schemes were mentioned in the budget this time.
The employment allowance of £3,000 per annum will be restricted to SMEs with an annual employers NIC bill of less than £100,000 from 2020.
Capital Gains Tax (CGT)
From April 2019, the current 12 months qualifying ownership period will be increased to 2 years, doubling the amount of time individuals will need to hold a business asset before qualifying for a reduced CGT rate. With immediate effect, shareholders must also be entitled to at least 5% of the distributable profits and net assets of the company to claim the relief.
From 2020, Lettings relief, currently worth up to £40,000 per person, will be abolished for individuals who are not in co-habitation with their tenants. In addition, the 18 months extension to the Principle Private Residence relief is being halved to 9 months. This will not affect disabled people or those living in care homes who will still benefit from 36 months.
Class 2 NIC will not be abolished during this parliament.
The measures taken last year against off payroll working in the public sector will be extended to the private sector as of 2020. This will only apply to medium and large organisation and will not affect smaller entities.
No further amendments were announced, and the previously stated rates will apply – currently 19% reducing to 17% from April 2020.
Digital Services Tax
From April 2020, a new 2% tax will apply to certain digital businesses. It will apply to search engines, social media platforms and online market places where the company of group generates global revenues from those activities of in excess of £500million per year. It will only apply where the company is making profits.
Research and development
From April 2020, SMEs claims for R&D tax credit that a qualifying loss-making company can receive in any year will be restricted to three times the company’s PAYE and NIC liability for the year.
Annual Investment Allowance to be increased to £1million for the next 2 years from 1 January 2019, however the annual writing down allowance for the special rate pool will be reduced to 6% from the current 8% level.
From April 2020 the treatment of capital losses will be aligned with income losses by restricting the relief of brought forward capital losses to 50%. Like for income loses, companies will have unrestricted use of the first £5million capital or income losses.
Annual Tax on Enveloped Dwellings (ATED)
No further changes were announced in the budget.
The current registration threshold of £85,000 and the deregistration threshold of £83,000 has not changed.
Stamp Duty Land Tax (SDLT)
Extension of SDLT relief for first time buyers
With immediate effect, SDLT for first time buyers involved in the purchase of shared ownership properties will be abolished on all purchases of up to £500,000. This relief will be backdated for those purchasers who have purchased this kind of property since the last budget.
From April 2019, the lifetime allowance will be increased in line with the CPI to £1,055million.
Click here to read CBW’s full 2018 Autumn Budget summary.