By admin | 30 October, 2018

Saul Fairholm’s overview of the Autumn Budget

Saul Fairholm Director Sarah English looks at what the Budget means

Here’s our overview of yesterday’s Budget by Saul Fairholm Director, Sarah English:

Saul Fairholm Director Sarah English


Budget – key points

  1. Capital allowances changes

The Annual Investment Allowance will increase to £1 million from 1 January 2019 to 31 December 2020.

The writing down allowance for special rate pool assets will be reduced from 8% to 6%.

Also, from October 2018, a ‘structures and building allowance’ will be introduced and businesses will be able to deduct 2% of the cost of any new non-residential structures and buildings off their profits before they pay tax.

2. A 2% digital services tax on large digital firms

From April 2020, large social media platforms, search engines and online marketplaces will pay a 2% tax on the revenues they earn which are linked to UK users.

3. Changes to the apprenticeship levy to support employers

From April, large businesses will be able to invest up to 25% of their apprenticeship levy to support apprentices in their supply chain. Some employers will pay half of what they currently pay for apprenticeship training – from 10% to 5%. The government will pay the remaining 95%.

4. Business rates changes

Small retail businesses will see their business rates bills cut by a third for two years from April 2019, saving them £900 million. Public lavatories will receive 100% business rates relief.

5. Entrepreneur’s Relief

Disposals from 5th April (there are transitional rules to deal with businesses that ceased to trade before 29th October 2018) the period during which the qualifying conditions must be met before relief is available will be increased from 12 months to 24 months.

6. Contracting and “IR35”

Last year public body end users were broadly made responsible for compliance with “IR35” legislation. HMRC will now extend this to the private sector from 6th April 2020.  In the period between then and now, HMRC promise to provide “extensive guidance and support” to affected businesses.

7. National Living Wage will increase to £8.21

From April 2019 the National Living Wage will increase from £7.83 an hour to £8.21, which is a £690 annual pay rise for a full-time worker.

8. The tax-free Personal Allowance will rise to £12,500

The Personal Allowance – the amount you earn before you have to start paying income tax– will increase by a further £650 in April 2019 to £12,500. This rise comes a year earlier than planned and will be maintained in 2020. 

9. The Higher Rate Threshold will increase from £46,350 to £50,000 in April 2019

The amount people will have to earn before they pay tax at 40% will increase from £46,350 to £50,000 in April 2019.

10. Property changes

The “shared occupancy” test that had been proposed to apply to rent-a-room relief will not now be applied, however capital gains tax “main residence” relief will be changed from April 2020 in two ways. First, the “final period” exemption is to be cut to 9 months from 18 months and second, lettings relief (which can exempt up to £40,000 of gain, or £80,000 for a jointly-owned property) will be available only for periods during which the owner is in shared occupancy with a tenant.

11. VAT registration limits

The VAT registration and deregistration thresholds were frozen at £85,000 and £83,000 until April 2020. This has now been extended for a further two years.