9th November 2018
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.
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.
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:
From 1 April 2020 the main rate of corporation tax will be reduced to 17%
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.
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:
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.
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.
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.
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.
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.
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.
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.
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.
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have you read our previous post?