The personal allowance and basic rate band.
The government had pledged to raise the personal allowance to £12,500 by April 2020 with the higher rate only being paid by those earning more than £50,000. However these proposals have been brought forward by a year taking effect from 6 April 2019. The Capital Gains Tax annual exemption for individuals will be £12,000 from 6 April 2019.
There were no changes to the income tax and capital gains tax rates.
Extending off-payroll working to medium/large organisations in the private sector
Following the changes to the IR35 legislation in 2017 to make the public sector responsible for enforcing the rules and collect payroll taxes, consultations had been launched with a view to extend the same rules to the private sector. The Chancellor announced in the Budget that these changes will indeed take place, but not until April 2020 and only for medium and large-sized businesses.
Temporary increase to the Annual Investment Allowance (AIA)
From 1 January 2019, the AIA will be increased from £200,000 to £1 million for the next two years in a bid to boost capital investment.
Freezing the VAT registration threshold for a further two years
Despite some speculation that it may be reduced, the Chancellor has kept the VAT registration threshold at £85,000 until 1 April 2022.
Changes to Entrepreneurs’ Relief and private residence relief
From 6 April 2019 the current 12 month ownership requirement for a trading business for Entrepreneurs’ Relief will be extended to two years to ensure that only genuine business can benefit from this generous relief. Also, in addition to the existing tests concerning unquoted trading company shares, the shareholder must also be entitled to at least 5% of the company’s distributable profits and net assets for the specified period. This change will take effect immediately. The lifetime limit of £10 million remains intact.
In the same sentiment, the government wants to ensure that only residences that are lived in can benefit from the other generous relief that is principal private residence relief. Currently the last 18 months’ ownership qualifies for this relief irrespective of whether the property is occupied. From 6 April 2020 this will be reduced to the last 9 months’ ownership. The existing 36 months allowance will be retained for disabled people and those in long-term residential care.
Lettings relief, which provides an extension of principal private residence relief to periods when a home is let out will also be amended with effect from 6 April 2020 to include a ‘shared-occupancy’ requirement that the owner lives in the property along with the tenant.
Measures to tackle the plastic problem
The government’s Resources and Waste Strategy will address concerns over single use plastics later in the year. In the meantime it was announced in the Budget that a tax will be imposed from April 2022 on the production and importation of plastic packaging which does not contain at least 30% recycled plastic. Incentives will also be introduced for manufacturers who design packaging that is easier to recycle and penalize those who use materials which cannot be easily recycled.
Previously announced measures include:
- Extending the charge to gains on non-UK residents on non-residential UK property from 6 April 2019. The change also applies to disposals of non-resident entities 75% or more of whose value derives from UK land and property.
- From April 2020 non-resident companies will be subject to UK corporation tax on rental income from UK land and properties rather than income tax as at present.
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