Autumn 2018 Budget
Summary
Personal Taxation
Income tax
The personal allowance will increase to £12,500 and the higher rate threshold will rise to £50,000 for 2019/20. From 2021/22, he personal allowance and higher rate threshold will increase in line with inflation. The Scottish tax bands and rates for non-savings, non-dividend income will be announced in the
Scottish Budget, due on 12 December.
Rent-a-room relief
Following consultation, there will be no new ‘shared occupancy test’ for rent-a room relief and the existing qualifying test of letting in a main or only residence will remain.
National Insurance Contributions (NICs)
As announced in September, Class 2 NICs will not be abolished during this Parliament. Reforms to the treatment of termination payments and income from sporting testimonials will be legislated for in the National Insurance Contributions Bill, with changes taking effect from April 2020.
Car benefit scale
The petrol car benefit charge for 2019/20 is based on CO2 emissions in grams per kilometre and the car’s list price when new. For diesel vehicles, add 3% to the scale up to 37% maximum. The scale for 2019/20 is as follows:
| CO2 g/km | 0-50 | 51-75 | 76-94 | 95 and above |
| Charge | 16% | 19% | 22% | 23% + 1% for each extra 5g/km over 95g/km up to max. 37% |
Pensions, Savings and Investments
Individual savings account (ISA) subscription limits
The ISA annual subscription limit for 2019/20 will remain at £20,000. The annual subscription limit for junior ISAs (JISAs) and child trust funds (CTFs) for 2019/20 will rise to £4,368.
Lifetime allowance for pensions
The lifetime allowance for pension savings will increase to £1.055 million for 2019/20. There is no change to the annual allowances.
Capital Taxes
Capital gains tax: annual exempt amount
The annual exempt amount for individuals and personal representatives will rise to £12,000 for 2019/20, while the amount for most trustees will increase to £6,000 (minimum £1,200).
Entrepreneurs’ relief
From 6 April 2019, the minimum period throughout which the qualifying conditions for the relief must be met will increase from 12 to 24 months. From 29 October 2018, shareholders claiming entrepreneurs’ relief must be entitled to at least 5% of the distributable profits and net assets of a company, in addition to the current requirements on share capital and voting rights.
As announced at the 2017 Autumn Budget, individuals can qualify for entrepreneurs’ relief where their shareholding is diluted below the 5% qualifying threshold by fund-raising events after 5 April 2019.
Private residence relief
From April 2020, the final period exemption will be reduced from 18 months to 9 months. There will be no changes to the 36-month final period exemption available to disabled individuals or to those in a care home. In addition, lettings relief will only apply where the owner of the property is in shared occupancy with the tenant from the same date.
Inheritance tax (IHT)
The IHT nil rate band remains at £325,000 for 2019/20. The residence nil rate band (RNRB) will increase to £150,000 from 6 April 2019, as already legislated.
Business Taxes
Corporation tax rate
The government has confirmed that the rate of corporation tax will fall to 17% in 2020.
Annual investment allowance (‘AIA’)
The AIA will be increased from £200,000 to £1 million for all qualifying investments in plant and machinery from 1 January 2019 until 31 December 2020.
Property Taxes
Business rates – self-catering and holiday let accommodation
The government will consult on the criteria under which self-catering and holiday lets become chargeable to business rates rather than council tax.
Stamp duty land tax (SDLT)
First-time buyers’ relief in England and Northern Ireland will be extended so that all qualifying shared ownership property purchasers can benefit, whether or not the purchaser elects to pay SDLT on the market value of the property. The change will apply to transactions with an effective date of 29 October 2018 and will also be backdated to 22 November 2017.
The government will publish a consultation in January 2019 on an SDLT surcharge of 1% for non-residents buying residential property in England and Northern Ireland.
Non-UK residents’ gains
Gains that accrue to non-UK residents on non-residential property will be subject to tax. Non-UK residents will also be subject to tax on gains in diversely held companies, those widely-held funds not previously included, and life assurance companies. They will also be taxed on gains on interests in UK property-rich entities, such as shares in companies that derive at least 75% of their value from UK land. The measures which have been previously announced will take effect for disposals made after 5 April 2019 and there will be an antiforestalling rule for arrangements entered into after 21 November 2017.
Value Added Tax
Registration and deregistration thresholds
The taxable turnover threshold for registration for value added tax (VAT) will remain at £85,000 until April 2022, two years longer than previously announced.
The deregistration threshold will stay at £83,000 for the same period. The government will look again at the possibility of introducing a smoothingmechanism once the terms of Brexit are clear.
Avoidance, Evasion and Unfair Outcomes
R&D tax relief for small and medium-sized enterprises
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.
HMRC preferential creditor status
From 6 April 2020, when a business enters insolvency, HMRC will be treated as a preferential creditor in respect of taxes collected and held by businesses on behalf of other taxpayers (VAT, PAYE income tax, employee NICs, and
construction industry scheme deductions). The creditor rules will remain unchanged for taxes owed by businesses themselves, such as corporation tax and employer NICs.
Tax abuse and insolvency
Following Royal Assent of Finance Bill 2019-20, directors and other persons involved in tax avoidance, evasion or phoenixing will be jointly and severally liable for company tax liabilities where there is a risk that the company may
deliberately enter insolvency.