Budget 2018 - highlights

The Chancellor Philip Hammond delivered his 2018 Budget on Monday 29 October. Announcing ‘the era of austerity finally coming to an end’, the Chancellor mentioned Brexit only once. He kept his options open, predicting a ‘double dividend’ in the event of successful negotiations but allowing for an expanded Spring Statement should the need arise.

Budget 2018

Taxation related measures in the Budget include the following:

Stamp Duty Land Tax – first-time buyer relief extended for qualifying shared ownership properties - backdated to 22 November 2017

Capital Gains Tax Entrepreneurs’ Relief – minimum qualifying holding period increases to two years – from April 2019

 Income Tax – personal allowance increases to £12,500; higher rate tax threshold rises to £50,000 – from April 2019

 Value Added Tax – registration threshold frozen at £85,000 taxable turnover - until 31 March 2022

 Capital Gains Tax Entrepreneurs’ Relief – personal company definition extended to require a minimum 5% interest in distributable profits and assets – effective immediately

Research and Development – restriction on amount of reclaimable tax credit – for accounting periods commencing on/after 1 April 2020

IR35 – ‘off-payroll’ rules for workers supplying services through intermediaries – extended to private sector - from April 2020

Capital Allowances – Annual Investment Allowance temporary increase for qualifying expenditure to £1M - for two years from January 2019

Capital Gains Tax – restriction of private residence relief on the sale of property which was previously a main residence: final exemption period reduced to 9 months; letting relief restricted to ‘shared occupancy’ owners – from April 2020

Capital Allowances - a new Structures and Buildings Allowance introduced - relief available on eligible costs incurred on qualifying contracts entered into on/after 29 October 2018; reduction of Special Rate writing down allowance from April 2019

Capital Gains Tax – annual exemption increases to £12,000 – from April 2019

Taxation of Charities – increase to small trading exemption profit limits; increase to Gift Aid small donations scheme limit – from April 2019

Recovery of unpaid taxes – HMRC to become a preferred creditor in business insolvencies – applicable to taxes effectively collected by the business on behalf of HMRC (PAYE, VAT, NIC, CIS) - from April 2020

Non-resident gains on UK non-residential property – scope of charge to Corporation Tax and Capital Gains Tax widened, to include gains on disposals of all forms of UK land realised by all non-UK residents - for disposals on/after 6 April 2019

Value Added Tax – changes to the treatment of ‘face value’ vouchers – definition of ‘single purpose’ or ‘multi-purpose’ vouchers to determine the VAT treatment of the voucher - for vouchers issued on/after 1 January 2019

Capital Gains Tax – accelerated payment of tax on gains on disposal of UK residential property – from April 2019 for non-UK residents and from April 2020 for UK residents

Digital Services Tax – 2% tax on the revenues of certain digital businesses deriving value from UK users - from April 2020

As many of the announcements are subject to legislation, the details of each measure may change during the legislative process and so should be kept under review. We look forward to hearing from you to discuss any of the budget announcements and implications for you or your business.

Lyn Canning Hagan, Tax Director