We’ve been analysing the announcements and commentary since last Wednesday and we’ve collated some areas we think will be of interest to our clients.
It was a budget in a pre-Brexit world where the focus has been on improving productivity and building the countries technological capabilities. There were incentives in the mix to increase investment in technology with the Chancellor targeting the UK to launch a new technology business every 30 mins rather than the current rate of 1 an hour.
Let’s hope those business have the help to survive and thrive.
The Budget headline was the abolition of stamp duty land tax (SDLT) for first time buyers of residential property outside Scotland on the first £300,000 of the purchase price for a home, provided its value does not exceed £500,000. This will save first time buyers up to £5,000. Unfortunately, this SDLT saving won’t apply where, for example, a parent and first time buying adult child buy a property together, say near the child’s university, as if there’s more than one purchaser, they all need to be first time buyers. The new SDLT relief applies to transactions with effect from 22 November 2017.
Other key measures include:
- a rise in the personal allowance to £11,850 from April 2018 (the Chancellor confirmed they are still committed to a target of £12,500)
- a rise in the higher rate threshold to £46,350 from April 2018 (the Chancellor confirmed they are still committed to a target of £50,000)
- NI reform to be delayed one year to April 2019 (as previously announced) so Class 2 NI will continue to be payable in 2018/19
- the lifetime allowance for pensions will increase to £1.03m for 2018/19 but there’s no change to the annual allowance of £40,000.
And a sigh of relief that there was no mention of changes to the Dividends tax rates or allowances. However, the previously announced fall in the Dividend Allowance from £5,000 to £2,000 from 6 April 2018 will still go ahead.
The give and take business rates change.
From April 2018 business rates will rise by CPI rather than RPI. CPI (which leaves housing costs out) is usually about 1.2% lower than RPI.
Then the ‘but’. Business rates will now face revaluations every 3 years rather than 5 years. So initially businesses will see rates rise more slowly under CPI, but before long they’ll be paying more as revaluations will happen every three years rather than every five.
A bit of help for businesses that occupy more than one floor in a building which has been affected by the so-called “staircase tax”, they can ask for the rate valuations to be recalculated so that they are based on previous practice backdated to April 2010, and they can also potentially get back small business rate relief as a result.
The planned reduction of the rate of corporation tax to 17% from 2020 was reconfirmed.
The national living wage will also increase from £7.50 an hour to £7.83 in April 2018, translation into a further £600 pay increase for full-time workers.
The change here is only for the Large Company R&D scheme, where the credit rises to 12% from 11%. Most of our clients will use the more generous SME scheme, the main exception is if the company has received funding towards the R&D, where depending on the terms, the company may only be able to claim under the Large Company R&D scheme.
From April 2018, an investor can invest an extra £1m into a ’Knowledge Intensive Company’ Plus, Knowledge Intensive Companies can now raise up to £10m annually.
A new change in ‘age’ definition which will now be from when the turnover exceeds £200k rather than when the company started trading. This means some previously excluded companies may now be able to use EIS to help raise investment.
Benefit in Kind
Car fuel and van benefits to increase by RPI 4% from April as previously announced.
The existing company car tax diesel supplement being increased from 3% to 4% from 6 April 2018 for diesel cars that don’t meet the Real Driving Emissions 2 standard – but the maximum percentage for calculating car benefits will remain at 37% of the car’s original list price
Businesses which are not registered for VAT can breathe a sigh of relief that the pre-budget prediction of a VAT threshold reduction did not materialise. The OTS had suggested a £20,000 VAT threshold which would have brought many businesses into the world of VAT.
The current VAT threshold will remain at £85,000 until at least 31 March 2020.
The government is undertaking a consultation into the design of the VAT registration threshold to address the distortions and barriers to growth it causes.
Another change is the requirement that online market places are now responsible for ensuring their sellers are reporting VAT correctly. Expect when selling on Amazon etc that there will be more questions when getting authorised as a seller.
Other than the SDLT mentioned above for first time buyers, only a few changes:
For individuals paying CGT on the sale of property which would have soon been required within 30 days of sale, this has been delayed until 2020. Non-residents already are required to report and pay CGT on sale within 30 days.
The government are also giving local authorities the power to charge a 100% council tax premium on empty properties.
If you have any questions about the impact these changes may have on you, please do get in contact.