In the budget of 29 October 2018, the Chancellor made a number of announcements. Nicola Roby, Director at CHW Small Business Accountants in Bolton summarises the key ones.
The Personal Allowance will increase to £12,500 in April 2019 (currently £11,850). The higher rate threshold increases to £50,000 (currently £46,350). This is a year earlier than was previously pledged.
The National Living Wage for those aged over 25 and over will increase to £8.21 per hour in April 2019 (currently £7.83). Increases for younger employees will be implemented at the same time.
The Universal Credit (UC) Work Allowances will be increased by £1,000 from April 2019 to ensure that it ‘pays’ to work.
Fuel duty has been frozen for the 9th year in a row along with beer, cider and spirit duties.
IR35 – Off-payroll working – the changes which have been implemented in the public sector will be extended to the private sector from April 2020. The rules will require the end client to assess whether PAYE and Class 1 National Insurance Contributions should be applied to contractors who are working through their own limited company.
The measures should ensure that those individuals working in the same way pay broadly the same amount of Income Tax and National Insurance Contributions, even though one of them works through a company.
These rules will be implemented in April 2020 and will only apply to large and medium-sized organisations, and it is their responsibility to assess whether the rules apply to each individual engagement.
Annual Exemption – the Capital Gains Tax (CGT) annual exempt amount will increase to £12,000 in April 2019 (currently £11,700). The exemption will increase in line with the CPI from 2020/21.
Principal Private Residence Relief (‘PPR’) – an individual will generally not pay CGT on a property they have occupied as their main residence. A final period exemption of 18 months has been available irrespective of whether they have occupied the property in that period or not. This period exemption will be reduced to 9 months with effect from April 2020.
To qualify for ER, an individual must meet certain conditions for a period of time preceding the qualifying disposal. This has been increased to 24 months from 12 months with effect from 6 April 2019.
Stamp duty for first time buyers – it was announced that first-time buyers’ relief will be extended so that all qualifying shared ownership property purchasers can benefit, regardless of whether the purchaser elects to pay Stamp Duty Land Tax on the market value of the property. This will apply to relevant transactions with an effective date on or after 29 October 2018. The relief will also be backdated to 22 November 2017 so that those eligible who have not previously claimed first-time buyers’ relief will be able to claim a refund.
Capital Allowances – It was announced that the Annual Investment Allowance (AIA) limit will be temporarily increased to £1million from £200,000 for all qualifying investment in plant and machinery made between 1 January 2019 – 31 December 2020.
The VAT threshold for registration remains fixed at £85,000 per annum for two years from 1 April 2020 as with the VAT deregistration threshold which will continue to be £83,000.
There was no change to the planned corporation tax rate reduction which will be 17% from April 2020.
From April 2020 the amount of payable Research & Development 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.
From April 2020 the £3,000 Employment Allowance will be available only to employers who had an Employer National Insurance contributions (NICs) bill below £100,000 in the previous tax year. The Employment Allowance will continue to be £3,000 for those qualifying companies.
In a bid to provide support for and regenerate our High Streets, business rates will be cut by one-third for retail properties with a rateable value below £51,000 for 2 years from April 2019.
Nicola says ‘Whilst this is by no means an extensive or detailed review of yesterday’s budget, I’ve aimed to highlight some of the key features which might be of interest.’