By Chris Downing – Director
This afternoon the Chancellor took to the stand to deliver the 2018 Budget. This was expected to be a cautious budget based on the unknown outcome of Brexit negotiations and how they would impact the economic forecasts going forwards.
However, there was then relatively little mention of Brexit, with much of the focus on how much the Chancellor could give away. There was much talk of Austerity being over, but discipline remaining. What is for sure, is that there was no talk of balancing the books anymore. There were few rabbits left in his hat, with many announcements being released in the months in advance, notably by the Prime Minister! However, there were some important tax changes which we have outlined below.
- Growth has been stronger than expected since March, with 1.6% now expected, averaging 1.5% across the next 5 years.
- Borrowing forecast to be £11.6bn this year, with subsequent years being £31.8bn , £26.7bn, £23.8bn, £20.8bn and £19.8bn.
- A year ahead of schedule, the tax free personal allowance will be £12,500 from April 2019 and the higher rate tax band will be £50,000.
Capital Gains Tax
- To qualify for Entrepreneurs Relief and pay tax at 10% on profits from a business sale, the qualifying time limit has been extended from 12 to 24 months.
- There have been changes to reliefs available when selling a property which isn’t your main home, reducing tax free elements.
- The Annual Investment Allowance for companies who undertake capital expenditure has increase from £200k per annum to £1m per annum, trying to stimulate some of the investment which is likely on pause for Brexit.
- Reductions to the £3k Employment Allowance for companies with a NIC bill of £100k or more.
- Changes to capital losses made by Companies and how they can be used moving forwards.
- From 1 April 2020 Medium Companies (turnover more than €10m and employing more than 50 people) will need to self-assess self-employed contractors (even those working via a personal limited company) working for them, to see if they are really self-employed.
- There will be a new Tech Services Tax on large companies – trying to tackle the likes of Facebook and Google.
- Extra tax relief for acquisitions of IP heavy businesses.
Other Announcements Affecting Business
- The Apprentice Levy will be halved for smaller businesses.
- Additional effort on avoidance; making HMRC a preferred creditor on a winding up of a company, Insurance Companies with offshore funds and Restrictions around R&D costs which can be claimed.
- Tax to come on plastic packaging, but the details of this measure are not yet confirmed.
The big question is whether we will be revisiting these measures in April next year post Breixt?
If you want to know more, please do get in touch and a member of the team will be in contact.