Significant tax measures

Harris & Co

1st December 2018

Budget Review

Harris & Co

PHIL Harris FCA of Harris & Co chartered accountants assesses Philip Hammond's final budget before Brexit, outlining the key measures and highlighting a number of significant tax measures.

Personal tax

The planned increase in 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. This will impact on business owners' remuneration strategies.

Entrepreneurs' relief

Entrepreneurs' relief will continue. However, the qualifying ownership period has been extended from 12 months to two years. Transitional rules will apply where the sale of the business was before 30 October 2018.

Annual investment allowance

Businesses will now be able to invest more due to a higher Annual Investment Allowance of £1m 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 and use sub-contractors instead.

IR35

The new IR35 rules applied in the pubic sector will not be introduced to the private sector until April 2020 and it will only affect large and medium-sized businesses who engage people through their own personal service companies. This will bring the private sector into line with the current public sector rules.

Property tax

The main residence relief will be restricted through new measures. The final qualifying period of ownership will be reduced to nine months.

VAT

The VAT registration threshold will be maintained until 2022.

Business rates for SMEs slashed

The Chancellor is to substantially cut business rates for small and medium-sized enterprises (SMEs), as part of a packet of measures designed to stave off criticism from business representatives and reduce the impact of decreasing footfall and rising costs on the high street

First-year allowance for electric charge-points extended

Chancellor Philip Hammond has extended the current 100 per cent first-year allowance for costs incurred on installing electric charge-points until 2023 to further encourage the take up of electric vehicles

Corporation tax rates remain unchanged

The Chancellor has confirmed that the corporation tax rate will remain unchanged from the previous Budget, staying at 19 per cent at present - the lowest of the G20 nations - and changing to 17 per cent from 2020

HMRC returns to preferred creditor list

From April 2020, HMRC will have greater priority to recover taxes paid by employees and customers in the event of an insolvency, a move aimed at ensuring 'that an extra £185m in taxes already paid each year reaches the government'

Rent a room relief rules tightened up

Budget 2018 announced changes to two of the ancillary reliefs in private residence reliefs, specifically those that provide relief on rented property and on gains made in the final period of ownership, regardless of occupancy.

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