Autumn budget highlights 2018

The Chancellor delivered the Autumn Budget speech on 29th October and pledged that austerity is coming to an end. The following key changes were announced:

Personal allowance.
An increase of the personal allowance to £12,500 for 2019/20 and 2020/21.

Higher rate threshold.
Individuals will not pay the higher rate of income tax until they have income in excess of £50,000 from 6th April 2019. 

Corporation tax.
The corporation tax rate will remain unchanged at 19% until 1st April 2020.

The VAT registration threshold will remain at £85,000 until 2022.

Capital gains tax.
Two new tests have been introduced in order to qualify for entrepreneurs’ relief. The changes are effective immediately so any of our affected clients could benefit from advice in this area and please contact us. To satisfy the definition of a personal company, the claimant must have a 5% interest in both the distributable profits and the net assets of the company. The new tests must be met, in addition to the existing tests, throughout the specified period to access the relief. From 6th April 2019 the minimum qualifying period for ER will increase from twelve months to 24 months. However, individuals that have a 5% interest that becomes diluted due to a share issue taking place from 6th April 2019 will now be able to access the relief. Changes to private residence relief from April 2020 were also announced. Lettings relief will be reformed so that it is only available to those who are in shared occupancy with a tenant. The final period exemption will be reduced from 18 months to nine.

Capital allowances.
The annual investment allowance will be increased. The current limit of £200,000 will increase to £1m from 1st January 2019 to 31 December 2020.

Employment taxes.
Tax rules for off-payroll working in the private sector (IR35) will be reformed to mirror the rules for the public sector from April 2020.

The full details can be found here.