News

Autumn Budget 2018

Personal Taxation

Personal Allowances

2019/20 personal allowance due to increase to £12,500, higher rate threshold is now £50,000.

 

Business Taxes

Corporation tax rate confirmed to reduce to 17% in 2020.

Annual investment allowance (AIA) to increase to £1 million on qualifying investments in plant & machinery with effect from 1st January 2019. Special rate qualifying plant & machinery to reduce from 8% to 6% with effect from April 2019.

VAT

VAT taxable turnover threshold for registration will remain at £85,000 until April 2022.

Deregistration threshold to remain at £83,000 up until the same date.

As previously announced, Making Tax Digital for VAT will commence on 1st April 2019. Please see further details below.

HMRC Preferential Creditor Status

From 6th April 2020, when a business enters insolvency, HMRC will be treated as preferential creditor in respect of taxes collected and held by business on behalf of other tax payers. (VAT, PAYE income tax, Employee NICs & Construction Industry Deductions). Creditor rules will remain unchanged for taxes owed by business themselves such as Corporation Tax and Employer NICs.

 

Capital Taxes

Capital Gains Tax

Annual exempt amount to increase to £12,000 per annum from 2019/20, (trusts £6,000 per annum).

Private residence relief from April 2020 will only apply where the owner of the property is in shared occupancy with the tenant. Final period exemption to be reduced from 18 months to 9 months.

Inheritance tax nil rate band to remain at £325,000 for 2019/20

 

National Insurance

Employment allowance to remain at £3000 per annum for 2019/20.

Lower earnings limit to increase to £118 per week from 6th April 2019. Primary threshold to increase to £166 per week.

 

National Minimum Wage and National Living Wage rates

The table below gives the current rates and those applicable from April 2019.

Year 25 and over 21 to 24 18 to 20 Under 18 Apprentice
April 2018 (current rate) £7.83 £7.38 £5.90 £4.20 £3.70
April 2019 £8.21 £7.70 £6.15 £4.35 £3.90

 

Pensions

Government to look into increasing pension participation and savings persistency among the self employed.

 

Personal Service Companies (PSC)

Where a PSC provides the services of a worker to a public body, such as a government department, NHS Trust or local authority, the public body should be responsible for deciding where the intermediaries legislation (also known as IR35) should apply. If it finds that the rules should apply then it would also have to pay HMRC the tax and National Insurance on the deemed employment payment, deducting those amounts from the amount it pays to the PSC.

The public body should not deduct the normal 5% flat rate deduction from payments for the workers services in computing the deemed employment payment. With effect from April 2020, the above regulations will apply to larger private companies.

For further details on the Autumn Budget please visit: https://www.gov.uk/government/publications/budget-2018-documents/budget-2018


Making Tax Digital for VAT

Businesses whose taxable turnover exceeds the VAT registration threshold will need to keep their records digitally, using Making Tax Digital (MTD) functional compatible software, and create the VAT return from that (or a combination of) software, for return periods starting on or after 1 April 2019.

Main Changes

Digital records must be maintained in what is defined as “functional compatible software” i.e. software or spreadsheets (or combination of both), which will connect to HMRC via an Application Programming Interface (API). These records must be digitally maintained for 6 years.

Changes to VAT Return Submission

VAT returns must be submitted to HMRC by means of a business’s functional compatible software communication digitally via HMRC’s API platform. Businesses will no longer be able to manually enter figures onto the HMRC portal.

“Soft Landing Period”

For VAT return periods commencing between 1 April 2019 and 31 March 2020, HMRC will not enforce the requirements to have digital links between software programmes. This is known as the “soft landing period”.  After this period, all transfers of data between digital records must be transferred digitally.

There is no “soft landing period” for the digital submission of the VAT return.

Submission of VAT Returns under MTD

We have obtained VAT filing software that enables us to file VAT returns online. If you are unable to file using an API, we will be able to do so on your behalf, should you wish to use this service.


National Insurance and the Higher Income Child Benefit Charge (HICBC)

Higher rate tax payers should beware that failure to claim the HICBC could result in the spouse not obtaining child benefit credits. It may well be beneficial to claim the benefit but to elect not to receive the payments.

Please contact us if you wish to discuss further.