Were you on the edge of your seat? … Desparate to hear what was going to happen in the budget? .. Or did you just hear the figure of “£130 better off” for basic rate tax payers.

Please see below a brief synopsis of the main points of the budget. You can decide for yourself if Phillip Hammond was delivering a Halloween trick or an early Christmas treat!

Personal Tax allowance
The personal Income Tax allowance for 2019-20 will be increased to £12,500 (2018-19 £11,850). BUT It will remain at this increased level for two years.

Income Tax bands, rates and the dividend allowance
The Income Tax bands for 2019-20 have been increased:
• Basic rate band increased to £37,500 (2018-19 £34,500)
• Higher rate band £37,501 to £150,000 (2018-19 £34,501 to £150,000)
• Additional rate, no change, applies to income of more than £150,000.

This means that the higher rate threshold will increase to £50,000 from April 2019.
There is no change in Income Tax rates, and the tax rates applied to dividend income. So thankfully no further erosion of the tax free dividend allowance.
Changes to these Income Tax bands apply to England, Wales and Northern Ireland, not Scotland as they set their own Income Tax bandings now.

Rent-a-room relief change cancelled
The expected change to require shared occupancy to qualify for rent-a-room relief is not to be introduced.
ISAs
For 2019-20, the ISA limit will remain at £20,000. The limit for Junior ISAs and the Child Trust Fund is to be increased to £4,368.

Limit on pensions’ savings to be increased
The life time limit on pension savings is to be increased in line with inflation to £1,055,000 for the 2019-20 tax year.

Earlier payments of Capital Gains Tax (CGT)
UK residents will be required to make a payment on account for CGT due on a residential property sale. The new regulations will also affect disposals by non-UK residents.
The changes will apply from April 2019 for non-UK residents and April 2020 for UK residents.
Capital Gains Tax Private Residence Relief changes
From April 2020, the government intends to make two changes to the private residence relief:
1. The final exempt period will be reduced from 18 months to 9 months, with no change to the 36 months available for those who are disabled or in care homes, and
2. Lettings relief will be reformed so that it only applies in certain circumstances where the property owner is in shared occupancy with the tenant.

CGT Entrepreneurs’ relief
Two changes are coming into effect:
1. Claimants must have a 5% interest in the distributable profits and the net assets of the company to qualify, and separately
2. That the minimum period during which certain conditions must be met to qualify for the relief is being increased from one to two years.
The first measure will have effect for disposals on or after 29 October 2018.
The second measure will have effect for disposals on or after 6 April 2019, unless a business ceased before 29 October 2018.

Inheritance Tax: changes to the nil-rate band
From 29 October 2018, amendments to the residence nil-rate band will provide certainty as to when a person is treated as “inheriting” property and clarify the “downsizing” rules.

Stamp duty first time buyers’ relief in England
This relief is being extended to cover the purchase of qualifying shared ownership property and will be effective for transactions on or after 29 October 2018 and will be backdated to 22 November 2017.
The first £300,000 of an initial share purchased will not be liable to SDLT based on the market value of the property. The remainder of the value over £300,000 will be charged at 5%. No SDLT will be chargeable on the associated lease. Relief is not extended to further shares purchased and will not apply to purchases of property valued at over £500,000.
Tobacco & Alcohol
As normal, bad news for smokers – the rates for duty for all tobacco products increased by inflation plus 2% from 6pm, 29 October 2018. Hand-rolling tobacco also rose by an additional 1% above this increase, to 3% above the RPI from the same date.
But for those who enjoy a drink, they will be pleased to note there are to be no increases to the duty charged on beers, spirits or cider, except for certain ciders treated as high strength for duty purposes.
But Wines and high strength sparkling cider drinks will see duty increased in line with inflation from 1 February 2019.
Vehicle excise duty
The VED rates for cars, vans and motorcycles is due to increase by reference to the RPI from 1 April 2019.
Fuel duty increase frozen
Duty increase is frozen for the ninth consecutive year.
Air passenger duty (APD) increases
Travellers should note that APD will increase in line with inflation for long-haul flight passengers only. The new rates will apply from 1 April 2020.

Business Tax changes

Corporation Tax – no change

No changes to corporation tax rates – they are to remain at 19% for the financial year beginning 1 April 2019.

VAT registration threshold – no change
The present VAT registration limit (£85,000) and deregistration limit (£83,000) will continue to apply for a further two years; until 31 March 2022.

Employment Allowance reform
From 2020, the government is to legislate to restrict access to the £3,000 NIC Employment Allowance, to employers with employer NIC liabilities of under £100,000 in the previous tax year. Connected employers will have their contributions aggregated for this purpose.

Annual Investment Allowance increased
The Annual Investment Allowance (AIA) is to be increased from the present £200,000 to £1m from 1 January 2019 to 31 December 2020.

R&D tax credit claims to be restricted
From 1 April 2020, the amount of payable tax credit that can be claimed under the R&D SME tax relief scheme will be limited to three times the company’s total PAYE and NIC payments for the period. Any loss that cannot be surrendered can be carried forward and used against future profits.

IR35 changes
The changes recently made to IR35 arrangements in the public sector are to be rolled out to the private sector. The changes will come into effect from April 2020 and small firms will be exempt.

Car and van fuel benefit charge increases
For 2019-20, these will increase by reference to the September 2018 retail prices index.

A new 2% digital services tax
From April 2020, the major social media, search engine and online retailers will be subject to a 2% tax on revenues generated from UK users of their services. This could change if an internationally recognised levy is introduced, with the Chancellor stating that the UK may fall into line in place of this 2% UK tax.

Rates relief for High Street retailers
Smaller retailers in England, occupying shop premises with rateable values under £51,000, will benefit from a cut of one-third in their business rates bills for 2 years from April 2019.

There is also another £675m to be spent on improvements by councils to help transform high streets, the redevelopment of empty shops as homes and offices and the repurposing of old and historic buildings.   The Chancellor also announced 100% business rates relief for public lavatories.

Plastics tax
The government is to consider introducing a tax on the production and importing of plastic packaging from April 2022.
The charge will apply to plastic packaging that does not contain at least 30% recycled plastic.

Changes to the apprentices’ levy
From April, larger employers will be able to invest up to 25% of their apprenticeship levy to support apprentices in their supply chain. Additionally, some smaller employers will pay half what they currently pay for apprenticeship training: a reduction from 10% to 5%. The government will fund the remaining 95%.

Charities small trading exemption increase
The limits that exempt small scale trading by charities from UK tax are to be increased to:
• If annual charity income is under £32,000 the trading limit is £8,000.
• If annual charity income is between £32,000 and £320,000, the trading limit is 25% of income.
• If annual charity income is more than £320,000, the trading limit is £80,000.
The changes will apply from 6 April 2019 for unincorporated charities and from 1 April 2019 for incorporated charities.

A new structures and buildings allowance (SBA)
This will provide tax relief for qualifying capital expenditure on new non-residential buildings where all contracts for the physical construction works are entered into on or after 29 October 2018.
Relief will not include the cost of land or dwellings.
Tax relief for electric charge points to be extended
The present first year allowances available for the installation of electric charge points is to be extended for four years, until the end of the financial year 2022-23.

Reduction in tax writing down allowance
The special rate of writing down allowance is being reduced from 8% to 6% from April 2019.

If you wish to discuss any of the above, just give us a ring.