Autumn Budget 2018: How will it affect me and my business?

9th November 2018

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The Chancellor of the Exchequer, Philip Hammond, unveiled his annual 2019 Autumn Budget to Parliament with a very clear message.

Outlining his plans for the UK’s finances, especially on the cusp of Brexit, the Chancellor said it’s a “Budget that shows the British people that the hard work is paying off” and that “austerity is finally coming to an end”.

But what does it mean for you and your business? Here, we give you a summary of the key announcements from the Chancellor’s big red book.

How is income tax affected by the Autumn Budget?

The Budget announced that the Personal Allowance – which is the amount you earn before you must start paying income tax – will increase by a further £650 to £12,500 in April 2019, rather than the original plan for it to begin in 2020.

The threshold for paying the higher rate tax will also increase, from £46,350 to £50,000.

This means a typical basic rate taxpayer will pay £130 less tax in 2019-20 than in 2018-19, and £1,205 less tax than in 2010-11.

The Chancellor believes this will increase the number of tax payers taken out of income tax since 2015-16 to 1.74million.

table showing income tax rates for 2017, 2018, 2019 and 2020

What does the Budget mean for business tax?

Corporation tax

The government has cut the corporation tax rate to 19% and legislating for it to fall to 17% in 2020.

Corporation tax rates are as follows:

table showing corporation tax in 2018 2019

From 1 April 2020 the main rate of corporation tax will be reduced to 17%

Research & Development (R&D) tax relief

As the government aims to prevent abuse of R&D tax relief for SMEs, from 1 April 2020, the amount of payable R&D tax credit that a qualifying loss-making company can receive in any tax year will be restricted to three times the company’s total PAYE and NICs liability for that year.

Digital Services Tax

From April 2020, the government will introduce a new 2% tax on the revenues of certain digital businesses to ensure that the amount of tax paid in the UK is reflective of the value they derive from their UK users. The tax will:

  • Apply to revenues generated from the provision of the following business activities: search engines, social media platforms and online marketplaces
  • Apply to revenues from those activities that are linked to the participation of UK users, subject to a £25 million per annum allowance
  • Only apply to groups that generate global revenues from in-scope business activities in excess of £500 million per annum
  • Include a safe harbour provision that exempts loss-makers and reduces the effective rate of tax on businesses with very low profit margins

Corporate capital loss restriction

From 1 April 2020, the government will limit the proportion of annual capital gains that can be relieved by brought-forward capital losses to 50%

This is to ensure large companies pay tax when they make significant capital gains.

Structure and building allowance

A relief of 2% will be available for expenditure on non-residential buildings, for which construction contracts are entered into after 29 October 2018. Qualifying costs relate to construction, improvement, conversion, including demolition costs and land alterations costs.

Is there any change in Stamp Duty Land Tax?

The chancellor announced relief up to the value of £500,000 back-dating from 22 November 2017, so those eligible who have not previously claimed first-time buyers’ relief will be able to amend their return to claim a refund. This does not apply in Scotland or Wales.

How are company vehicles affected by the Budget?

Fuel duty has been frozen for the ninth year in a row.

The taxable benefit for unrestricted private use of company vans is £3,430 for 2019-20. There is a further £655 taxable benefit if the employer provides fuel for private travel.

What about Making Tax Digital?

We should all know by now that Making Tax Digital (MTD) will come into effect in April 2019, as we have gone into length on in a previous post. The Chancellor made no new announcements on MTD during his Autumn Budget speech.

What is Enterprise tax?

Entrepreneurs’ Relief

Legislation will be introduced in Finance Bill 2018-19 for disposal made on or after 6 April 2019, to increases this minimum period throughout which certain conditions must be met to be eligible for Entrepreneurs Relief from one year to two years.

What does the Budget mean for VAT?

The VAT threshold will be maintained at the current level of £85,000 for a further two years until April 2022. The government will look again at the possibility of introducing a smoothing mechanism once the terms of EU exit are clear.

Are apprenticeships affected?

SMEs will now only pay 5% towards the cost of an apprentice’s training costs, down from the previous 10% co-investment rate. This change is expected to come into effect from April 2019.

For more information on the effects to apprenticeships read this blog.

I have some further questions about the Autumn Budget

Good. We’d love to help answer them for you. We offer plenty of advice on tax and financial planning, and other issues that will arise from the Autumn Budget.

If you would like to discuss anything further with us, or would like some one-on-one advice in more detail, please fill in your details below and one of the team will be in touch. Alternatively, give us a call on 0333 200 0714.

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