The Chancellor, Phillip Hammond, delivered his Autumn Budget on Monday, the 29th of October. We have produced a summary of the key points from the budget, looking at personal taxation, pensions and savings, business investment and taxation, as well as other details.
- Personal Taxation – Income Tax, Off-payroll working in the private sector, National Insurance Contributions, and Employment Allowance
- Capital Taxes – Capital Gains Tax, Entrepreneur’s Relief
- Business Taxes – Corporation tax rate, Annual Investment Allowance, Special-rate writing down allowance, Structures and buildings allowance, R&D tax relief
- Value-Added Tax – Registration and deregistration thresholds
Personal Taxation
Income tax – The personal allowance will increase to £12,500 and the higher rate threshold will rise to £50,000 for 2019/20. From 2021/22, the personal allowance and higher rate threshold will increase in line with inflation.
Off-payroll working in the private sector – Following consultation and the roll-out of reform in the public sector, responsibility for operating the off-payroll working rules in the private sector will move from individuals to the organisation, agency or other third party engaging the worker. The change will take effect from April 2020, with an exemption for small organisations.
National insurance contributions – As announced in September, Class 2 NICs will not be abolished during this Parliament. Reforms to the treatment of termination payments and income from sporting testimonials will be legislated for in the National Insurance Contributions Bill, with changes taking effect from April 2020.
Employment allowance – From April 2020, the employment allowance of £3,000 a year will be restricted to employers with an employer national insurance contributions (NICs) bill below £100,000 in their previous tax year.
Capital Taxes
Capital gains tax: annual exempt amount – The annual exempt amount for individuals and personal representatives will rise to £12,000 for 2019/20, while the amount for most trustees will increase to £6,000 (minimum £1,200).
Entrepreneurs’ relief – From 6 April 2019, the minimum period throughout which the qualifying conditions for the relief must be met will increase from 12 to 24 months.
Business Taxes
Corporation tax rate – The government has confirmed that the rate of corporation tax will fall to 17% in 2020.
Annual investment allowance – The AIA will be increased from £200,000 to £1 million for all qualifying investments in plant and machinery from 1 January 2019 until 31 December 2020.
Special rate writing down allowance – The capital allowances special rate for qualifying plant and machinery, such as long-life assets, will be reduced from 8% to 6% from April 2019.
Structures and buildings allowance – A 2% capital allowance will apply to qualifying capital expenditure on new non-residential buildings and structures where all the contracts for the physical construction works are entered into on or after 29 October 2018. Relief will not be available for the costs of land or dwellings.
R&D tax relief for small and medium-sized enterprises – From 1 April 2020, the amount of payable R&D tax credit that a qualifying loss-making company can receive in any tax year will be restricted to three times the company’s total PAYE and NICs liability for that year.
Value-Added Tax
Registration and deregistration thresholds – The taxable turnover threshold for registration for value added tax (VAT) will remain at £85,000 until April 2022, two years longer than previously announced. The deregistration threshold will stay at £83,000 for the same period. The government will look again at the possibility of introducing a smoothing mechanism once the terms of Brexit are clear.
