“….austerity is coming to an end – but discipline will remain” – these were the words from the Chancellor, Philip Hammond, to summarise his October budget speech which lasted more than 70 minutes, aiming to prepare the county for a “new chapter”.
The key highlights:
Personal Taxation
Income tax
The personal allowance will increase to £12,500 with the higher rate threshold rising to £50,000 for 2019/20, one year earlier than originally planned. From 2021/22 both will increase in line with inflation.
Remember your personal allowance reduces by 50p for every pound you earn over £100,000. Consider increasing your pension contribution or making a charitable gift to bring your income below £100,000.
Rent-a-room relief
The proposed occupancy test is not going ahead and the existing tests will still apply.
Pensions and Savings
ISA subscription limits
The ISA annual limit for 2019/20 will stay at £20,000, however the junior ISAs (or JISAs) and child trust funds (CTFs) will increase to £4,368.
Lifetime Pension allowance
The lifetime allowance for pension savings will increase to £1.055 million from 2019/20. If you are planning to draw from your pension and already have funds exceeding the present lifetime allowance of £1.03 million, it may be worth you waiting until this new increase is introduced.
Pensions for the self employed
During the winter the Department for Work and Pensions will publish a paper detailing the approach the Government will take to encouraging an increase in savings and pension contributions from the self-employed.
Capital Taxes
Capital Gains (CGT)
The annual exempt amount for individuals will rise to £12,000 for 2019/20.
From 6th April 2020, CGT on residential property will need to be paid within 30 days of sale. The existing rules however can allow payments to be made up to almost 21 months, so bear this in mind if you are thinking of selling buy-to-let property.
Inheritance Tax
The IHT nil rate band remains at £325,000 for 2019/20. The residence nil rate band (RNRB) will increase to £150,000 from 6th April 2019 with minor RNRB amendments from 29th October 2018 with regards to downsizing provisions and the definition of “inherited”.
IHT simplification is forecasted – it could be a good time to consider making lifetime gifts before the tax rules are “simplified” and made less generous.
Business Taxes
Corporation tax rate
The rate of corporation tax will fall to 17% in 2020.
Digital services tax
A new 2% tax will be levied from April 2020 on the global revenues of some digital businesses who take value from their UK users. This will only apply to groups that generate more than £500 million a year through the provision of search engines, social media platforms and online market places with UK participation.
Plastic packaging
From April 2022, a tax on the production and import of plastic packaging will come into place, which will likely apply to packages that does not contain at least 30% recycled plastic.
Apprenticeship levy
Employers who pay levies will be able to transfer up to 25% of their funds to pay for apprenticeship training.
Auto-enrolment – automatic enrolment pension minimum contributions will rise significantly again from 6th April 2019, so ensure you and those you employ understand the implications.
Property Taxes
Business rates – retail
These will be reduced for two years from April 2019 by one third for retail properties who have a rateable value of less than £51,000. This should aid up to 90% of retail properties.
Stamp duty land tax (SDLT)
First time buyers’ relief in England and Northern Ireland will include all qualifying shared ownership property on transactions up to a value of £500,000, from 29th October 2018 but backdated to 22nd November 2017.
