Autumn Budget 2018
CHANCELLOR Philip Hammond delivered his Budget on Monday (29th October 2018) against a backdrop of Brexit negotiations and growing questions about what a divorce from the EU means for the UK economy.
A large number of spending commitments were announced, including the much vaunted increased funding for the NHS, but as far as tax revenue is concerned, the Budget is perhaps notable for the number of pre-Budget predictions that did not come to pass. Pensions tax relief is largely untouched, capital gains tax rates are not increased, and the personal allowance and basic rate limit have not been frozen (though the freeze will take place in 2020 instead so could be said to be merely delayed).
The main tax announcements are summarised below. As always, if there is anything that you wish to discuss further, or have any concerns with your future tax status, please get in touch with one of the partners.
1. Rates & Allowances
The amount you earn before you have to start paying income tax– will increase by a further £650 in April 2019 to £12,500. This rise comes a year earlier than planned, and will be maintained in 2020. This means a basic rate taxpayer will pay £1,205 less tax in 2019-20 than in 2010-11.
Car and van benefits
The amount to which the appropriate percentage is applied in determining the taxable benefit of company car fuel.
Most employers can currently claim an employment allowance of up to £3,000 to offset against their liability to employer Class 1 NICs. The Government are to restrict the allowance to employers with an employer NICs liability of less than £100,000 in the preceding tax year. Where employers are connected, the £100,000 threshold will apply to their aggregated liability. This change will take effect from 2020.
At the moment you don’t have to pay any CGT for the years you lived in the property, plus an additional exemption for the final 18 months that you owned it, even if you weren’t living there at the time. But Hammond announced that from April 2020 this final period exemption will be cut to nine months. (There will be no change to the 36 months available to disabled people or those in, or moving into, a care home.)
All first-time buyers purchasing shared equity homes of up to £500,000 will be eligible for first-time buyers' relief
Lettings relief is limited to properties where the owner is in shared occupancy with the tenant
Extension of first-time buyers’ relief
First-time buyers’ relief will be extended to include qualifying shared ownership property purchases in England and Northern Ireland. The first £300,000 on an initial share purchased will not be liable to SDLT.
3. Capital Gains Tax
With effect for disposals on or after 29 October 2018, a new test will be added to existing tests that determine if a company is an individual’s personal company for entrepreneurs’ relief. The minimum period throughout which certain conditions must be met to qualify for entrepreneurs’ relief, for example the period a business must be carried on immediately prior to a disposal, is to be increased from one year to two years.
Capital gains tax payment window
Also as announced at Autumn Budget 2017, the Government will legislate in Finance Bill 2019 to introduce a requirement for UK residents to make a payment on account of capital gains tax following the completion of a residential property disposal. This will apply to disposals by non-UK residents on or after 6 April 2019 and by UK residents on or after 6 April 2020.
4. Business Relief
Capital allowances The annual investment allowance will temporarily increase from £200,000 to £1 million for the two year period from 1 January 2019 to 31 December 2020.
5. ISAs and Child Trust Funds
The ISA annual subscription limit will remain at £20,000 for 2019/20. The annual subscription limits for Junior ISAs and Child Trust Funds are increased in line with inflation to £4,368 from 6 April 2019.
6. Pensions Tax
The lifetime allowance is increased with inflation to £1,055,000.
7. Headline Duty
In 2019, fuel duty will remain frozen for the ninth year in a row, saving the average driver £1,000 since 2010.