barnes roffe llp€¦ · barnes roffe llp budget 2018 national insurance bandings 18/19 19/20 lower...
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BARNES ROFFE LLP BUDGET 2018
BUDGET SEMINAR 2018
30 OCTOBER 2018
BARNES ROFFE LLP
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BARNES ROFFE LLP BUDGET 2018
BARNES ROFFE LLP
STEPHEN CORNER
FCA, LLB (Hons), Barrister
Partner
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BARNES ROFFE LLP BUDGET 2018
POST BREXIT BUDGET
Last Monday Budget was in 1962!
When will the next Budget be?
“Era of austerity is coming to an end”
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BARNES ROFFE LLP BUDGET 2018
BREXIT
£15 Billion Post Brexit Cushion
Next spending review Spring 2019
Growth forecasts at least 1.4% for
next five years
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BARNES ROFFE LLP BUDGET 2018
PERSONAL ALLOWANCE
2018/2019 £11,850
2019/2020 £12,500
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BARNES ROFFE LLP BUDGET 2018
IT RATE BANDS
2018/19 2019/20
20% £34,500 £37,500
40% £115,500 £112,500
45% Unlimited Unlimited
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BARNES ROFFE LLP BUDGET 2018
REDUCTION IN
PERSONAL ALLOWANCE
Where gross income (income less
losses) exceeds £100,000 p.a. personal
allowances will be withdrawn at rate of
£1 for every £2 income above
£100,000 until eliminated at £125,000
(2019/20).
Effect: a 60% tax band!
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BARNES ROFFE LLP BUDGET 2018
(w.e.f. April 2016)
Nil rate band for investment income
(excluding dividends)
of up to £1,000 (within the basic rate band)
(£500 for HR (within HR band)
& £0 upper rate)
(in addition to ISA’s, etc)
PERSONAL SAVINGS
ALLOWANCE
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BARNES ROFFE LLP BUDGET 2018
SAVINGS RATE
Starting rate band of 0% for savings
(excluding dividends)
£5,000.
Band not available to the extent that non-savings
income exceeds personal allowance
i.e. £1 for £1 reduction.
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BARNES ROFFE LLP BUDGET 2018
EFFECTIVE DIVIDEND
RATES2018/19 2019/20
Tax-free Dividend Allowance £2,000 £2,000
Within Basic Rate Tax Band 7.5% 7.5%
Within Higher Rate Tax Band 32.5% 32.5%
Within Additional Rate Tax Band 38.1% 38.1%
Within Trusts 38.1% 38.1%
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BARNES ROFFE LLP BUDGET 2018
S.455
Loans to participators
32.5%
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BARNES ROFFE LLP BUDGET 2018
All Companies
20% 40%
tax payer tax payer
Dividends 25.08% 45.33%
Remuneration 40.25% 49.03%
DIVIDEND V. SALARY
2019/2020
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BARNES ROFFE LLP BUDGET 2018
All Companies
60% 45%
tax payer tax payer
Dividends 61.53% 49.86%
Remuneration 66.61% 53.43%
DIVIDEND V. SALARY
2019/2020
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BARNES ROFFE LLP BUDGET 2018
NATIONAL INSURANCE
(CLASS 4)
18/19 19/20
Between the Bands 9% 9%
Above Upper Earnings Limit 2% 2%
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BARNES ROFFE LLP BUDGET 2018
NATIONAL INSURANCE
BANDINGS
18/19 19/20
Lower earnings limit £116 p.w. £118 p.w.
Primary threshold £162 p.w. £166 p.w.
Employees/Self Employed
Annual upper earnings/
Profits Limit £46,350 £50,000
If salary is paid above lower earnings, earnings count
towards state pension.
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BARNES ROFFE LLP BUDGET 2018
NATIONAL INSURANCE
EMPLOYERS
18/19 19/20
Above Threshold 13.8% 13.8%
Above Upper
Earnings Limit 13.8% 13.8%
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BARNES ROFFE LLP BUDGET 2018
NATIONAL INSURANCE
EMPLOYEES
18/19 19/20
Above Threshold 12% 12%
Above Upper
Earnings Limit 2% 2%
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BARNES ROFFE LLP BUDGET 2018
NICS EMPLOYMENT
ALLOWANCE
£3,000 annual ‘allowance’ available
against NIC’s.
From April 2020 only available where
employer NIC bill is less than
£100,000.
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BARNES ROFFE LLP BUDGET 2018
CLASS 2 NIC
w.e.f. 5 April 2018
Abolished
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BARNES ROFFE LLP BUDGET 2018
CT MAIN RATES
2015/16 20%
2016/17 20%
2017/18 19%
2018/19 19%
2019/20 19%
2020/21 17%
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BARNES ROFFE LLP BUDGET 2018
CAPITAL ALLOWANCES
WDA 18% 18%
Special Rate WDA 8% 6%
AIA £200,000*
* £1m for additions made between 1 January
2019 and 31 December 2020
18/19 19/20
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BARNES ROFFE LLP BUDGET 2018
SBA
Structures and Buildings Allowance
2% on eligible costs on new non-residential
structures and buildings
Contracts and work start post 29 October
2018
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BARNES ROFFE LLP BUDGET 2018
R & D
R & D Tax Credits for SME’s at 230% of
expenditure.
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BARNES ROFFE LLP BUDGET 2018
R & D
TAX CREDITS
New limit – w.e.f. April 2020
Tax credits not to exceed x3 total NIC
and PAYE bill
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BARNES ROFFE LLP BUDGET 2018
BUY TO LET INTEREST
RELIEF-INDIVIDUALS Phasing in the elimination of Higher Rate Tax Relief
on buy to let interest for INDIVIDUALS:
Tax Year Higher Rate Restriction
2017/18 25%
2018/19 50%
2019/20 75%
2020/21 100%
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BARNES ROFFE LLP BUDGET 2018
OFFSHORE PROPERTY
COMPANIES
From April 2020 corporation tax and
not income tax will apply to
immoveable UK property held by
non-resident companies.
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BARNES ROFFE LLP BUDGET 2018
EBT LOANS
Outstanding loans deemed
remuneration on 5 April 2019.
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BARNES ROFFE LLP BUDGET 2018
CAPITAL GAINS TAX
Annual exempt amount £12,000 (£11,700)
10% in basic rate income tax band
20% for higher and additional rate band
28% for residential property and trusts
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BARNES ROFFE LLP BUDGET 2018
INDEXATION RELIEF
Frozen for corporates from January 2018
(almost 20 years after it was abolished for
individuals!)
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BARNES ROFFE LLP BUDGET 2018
CAPITAL GAINS TAX
ENTREPRENEUR’S RELIEF
Life time limit
£10M
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BARNES ROFFE LLP BUDGET 2018
CGT: ER CHANGES
(w.e.f. 29 October 2018)
2 year qualifying period
5% test now will also apply to distributable
profits and net assets
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BARNES ROFFE LLP BUDGET 2018
CGT: ER CHANGES
New anti-dilution relief
will apply from
6 April 2019
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BARNES ROFFE LLP BUDGET 2018
CGT PAYMENT WINDOW
30 day payment window to pay tax on
disposal of residential property
deferred until April 2020
(for non-residential applies from
April 2019)
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BARNES ROFFE LLP BUDGET 2018
NON-RESIDENT
CAPITAL GAINS
w.e.f April 2019 offshore gains on
commercial properties will be taxable.
The rules are widened to include
indirect disposals, non-resident
companies will be subject to
corporation tax on gains.
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BARNES ROFFE LLP BUDGET 2018
PPR RELIEF
w.e.f April 2020
Final period exemption reduced to 9
months
Lettings relief will only be applied when in
shared occupancy with a tenant
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BARNES ROFFE LLP BUDGET 2018
INHERITANCE TAX
• Annual Exemption £3,000 £3,000
• Nil Rate Band £325,000 £325,000
• Lifetime transfer rate 20% 20%
• Death transfer rate 40% 40%
• Cumulation period (years) 7 7
• Rates of B.P.R.:-
- Higher 100% 100%
- Lower 50% 50%
2018/19 2019/20
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BARNES ROFFE LLP BUDGET 2018
INHERITANCE TAX
“Effective” joint nil rate band of
£650,000
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BARNES ROFFE LLP BUDGET 2018
IHT BAND-PASSING ON
MAIN RESIDENCES
Additional nil rate band £175,000 per individual
in respect of family home phased in:
2017/18 £100,000
2018/19 £125,000
2019/20 £150,000
2020/21 £175,000
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BARNES ROFFE LLP BUDGET 2018
IHT BAND-PASSING ON
MAIN RESIDENCES
• Assets in band must go down the lineal
descendant chain
• Protection in cases of downsizing (8 July
2015)
• Unused relief can be ‘passed’ to ‘spouse’ on
death
• Withdrawal on £1 for £2 basis, estates of 2m
or more
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BARNES ROFFE LLP BUDGET 2018
SDLT:
NON-RESIDENTIAL
RATE NON-RESIDENTIAL
Zero £0 - £150,000
2% £150,001 - £250,000
5% £250,001 and OVER
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BARNES ROFFE LLP BUDGET 2018
SDLT
RATE RESIDENTIAL
Zero £0 - £125,000
2% £125,001 - £250,000
5% £250,001 - £925,000
10% £925,001 - £1,500,000
12% £1,500,001 and OVER
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BARNES ROFFE LLP BUDGET 2018
SDLT: ADDITIONAL
RESIDENTIAL PROPERTIES
THRESHOLD: MAIN SDLT
RATE:
ADDITIONAL
RATES
£0 - £125,000 0% 3%
£125,001 - £250,000 2% 5%
£250,001 - £925,000 5% 8%
£925,001 - £1,500,000 10% 13%
£1,500,001 and OVER 12% 15%
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BARNES ROFFE LLP BUDGET 2018
SDLT: ADDITIONAL
PROPERTIES (2)
If individual owns 2 or more properties and
has not replaced their main residence.
Can reclaim if sell main residence within
3 years.
Companies will always pay the higher rate.
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BARNES ROFFE LLP BUDGET 2018
SDLT CONSULTATION
Extra 1% SDLT for all non-resident
purchasers of residential property
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BARNES ROFFE LLP BUDGET 2018
SDLT
Payment & filing window reduced
to 14 days from 1 March 2019.
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BARNES ROFFE LLP BUDGET 2018
ATED RATES
VALUE ANNUAL CHARGE
2019/2020
£500,000 - £1,000,000 £3,650
£1,000,001 - £2,000,000 £7,400
£2,000,001 - £5,000,000 £24,800
£5,000,001 - £10,000,000 £57,900
£10,000,001 - £20,000,000 £116,100
£20,000,001 and OVER £232,350
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BARNES ROFFE LLP BUDGET 2018
VALUE ADDED TAX
20%
Registration limits £85,000 (£85,000)
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BARNES ROFFE LLP BUDGET 2018
Cash value limit
2018/19 £20,000*
2019/20 £20,000*
No cash/shares limits.
Privileged ISAs status can be inherited by
spouse on death.
*includes lifetime ISA’s if contributed to.
ISAs
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BARNES ROFFE LLP BUDGET 2018
Annual Contribution Cap
£40,000
Lifetime Allowance
£1,055,000 (was £1,030,000)
PENSIONS
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BARNES ROFFE LLP BUDGET 2018
RESTRICTION ON PENSION
PREMIUM RELIEF
£40,000 annual allowance reduced by £1
for every £2 earnings (including
employer contributions) above £150,000
Minimum allowance - £10,000
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BARNES ROFFE LLP BUDGET 2018
IR35
Changes:
As for Public Sector, coming for
medium and large enterprises from
2020
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BARNES ROFFE LLP BUDGET 2018
OFFSHORE EVASION
Specific duty to correct position by
1 October 2018 or face higher
penalties.
New – “normal” assessment period for
offshore irregularities of 12 years!
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BARNES ROFFE LLP BUDGET 2018
MTD
Introduction begins with
VAT only in April 2019
(no delay announced yet!)
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BARNES ROFFE LLP BUDGET 2018
DIGITAL SERVICES
TAX
w.e.f. April 2020
Applies to revenues (not a sales tax)
Will include a safe harbor (losses/low
margin businesses)
Applies to £500M+ turnover businesses
only
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BARNES ROFFE LLP BUDGET 2018
TAX ABUSE &
INSOLVENCY
w.e.f. April 2020
Re-instate HMRC debt preference for taxes
collected on behalf of HMRC
Create personal liability for directors in
cases of deliberate failure or phoenixism
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BARNES ROFFE LLP BUDGET 2018
BREXIT COIN
50 pence commemorative
Brexit coin available from
Spring 2019
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BARNES ROFFE LLP BUDGET 2018
DISCLAIMER
This summary is based on the
HMRC press releases and the
information contained herein is
subject to the wording of proposed
legislation and change.