Philip Hammond gave his budget talk on 29th October 2018. There was good news for businesses, an apparent end in sight for austerity but a warning that discipline must remain.
The Conservatives’ manifesto pledge to increase personal allowances to £12,500 and the higher rate threshold to £50,000 will be implemented from April 2019, which is one year earlier than proposed.
Despite the pre-budget speculation, entrepreneurs’ relief will continue. However, the qualifying ownership period has been extended from 12 months to two years. Transitional rules will apply where the claimant’s business ceased before 30 October 2018.
Annual investment allowance
Businesses will now enjoy a higher AIA of £1,000,000 for the two years beginning January 2019, this should encourage capital investment.
Research and development
Refunds arising from research and development claims will be restricted to the PAYE paid by the company. This will restrict the benefit of R&D claims by companies that do not have employees.
The new IR35 rules will not be introduced to the private sector until April 2020 and it will only affect large and medium sized businesses. This will bring the private sector into line with the current public sectors rules.
Property tax: individuals
The main residence relief will be restricted. The final qualifying period of ownership will be reduced to nine months.
Property tax: Non-UK companies
Non-UK resident companies receiving UK property income will no longer be taxed to income tax from 6 April 2020. They will be taxed to corporation tax instead with iXBRL accounts required. This will mean more cost to the company and possibly less deductions available.
Property tax: Non-resident CGT
Currently, when an individual is non-resident, they only pay capital gains tax on disposal of UK residential property. As of April 2019, this will be extended to commercial property as well. In other words, if a non-resident individual sells a UK property of any nature, they will need to report this to HMRC within 30 days of conveyance and pay capital gains tax on any gain.
The rules have also been extended to the sale of shares in a company by non-resident individuals where more than 75% of the value comes from UK property.
Stamp Duty Land Tax
Extension of SDLT exemption for joint first time buyers acquiring a property of up to £500,000. This measure is retrospective and first time buyers in this position may be able to claim a refund.
The VAT registration threshold will be maintained until 2022.