On Monday 29th October at 15.30 pm, Chancellor Philip Hammond delivered the Autumn Budget.
The announcement was a surprise for various reasons: earlier in the year than normal (due to Brexit); on a Monday instead of a Wednesday; and later in the day than is typical (because parliamentary matters commence at a later time on Monday due to the fact that MPs have to travel in from their constituencies). But did the budget itself hold any other surprises?
Autumn Budget 2018: Key Facts
In this blog, we’ll focus on updates related to business taxes and incentives. Below is a general summary of the key elements detailed in the Autumn Budget:
- Additional £500m of departmental funding for Brexit.
- £650 increase in personal allowance to be introduced from April 2019 (ahead of schedule).
- From April 2019 there will be a two-year cut in rates for small retail businesses.
- From 2020, a new 2 Digital Services Tax will be brought in.
- The VAT threshold will remain as it is until April 2022.
- The SDLT exemption for first-time buyers will be extended to shared equity homes (for purchases up to £500,000).
Autumn Budget 2018: Business Taxes and Allowances
Corporation Tax will see a further cut in the next couple of years: 2019 remains unchanged at 19 , but in 2020 this will drop to 17 from 1st April 2020.
Allowances and Incentives
- The Annual Investment Allowance will be temporarily increased from £200,000 to £1m (in relation to qualifying expenditure incurred between January 2019 and December 2020).
- A new structures and building allowance will be introduced. 2 relief will be offered for qualifying expenditure related to new non-residential buildings and structures.
- There will be changes to first-year allowances. From April 2020, products on the Energy Technology and Water Technology lists will no longer be eligible for FYA and first year tax credits. However, the existing 100 FYA related to electric charge-point product costs will be extended for a further four years (until 2023).
- The amount of payable tax credit that can be claimed under R&D relief for SMEs will be limited (from April 2020, a company can claim no more than three times the company’s total PAYE and NICs payment for the relevant accounting period).
- From 2020, access to the NICs Employment Allowance will be restricted. Only employers with employer NICs liability below £100,000 for the previous tax year will qualify.
- From April 2019, the writing down allowance for the special rate pool of plant and machinery will be reduced by 2 (from a rate of 8 to 6 ).
It is expected that legislation will be brought in to limit companies’ use of carried forward capital losses from April 2020. Companies will be able to carry forward capital losses equal to no more than 50 of capital gains.
Non-UK Resident Companies: Property Income and Gains
From April 2020 non-UK resident companies that have UK property interests (which run a property business within the UK, for instance) will incur corporation tax charges as opposed to income tax charges.
Working Rules: Off-Payroll
From April 2020, organisations and agencies (or any third-party in charge of a paying a personal service company) will be held responsible for adhering to the current off-payroll working rules (as well as deducting the necessary tax/NICs), rather than individuals. Small companies will be exempt.
Digital Services Tax
A new 2 tax on revenues from specific digital businesses will be imposed from April 2020. The tax will apply to revenues connected to the participation of UK users (subject to an annual allowance of £25m) and that which is generated from search engines, online marketplaces, and social media platforms. The new legislation will include a provision to exempt loss-makers and reduce tax for businesses that operate with very low profit margins, and will only apply to organisations generating global revenues of more than £500m per year (from activities that are defined as ‘in-scope’).
If you’re concerned about what the autumn budget might mean for your business, don’t hesitate to get in touch with IBISS & Co. Our specialist tax advisers and experienced chartered accountants will be able to advise on any upcoming changes.