Other key changes in the Budget
The personal allowance will be £12,500 and the basic rate band will be £37,500. A total income of £50,000 before paying higher rate tax (and also losing child benefit) so a very high marginal tax rate if you have children.
Other changes that were announced in the Budget that will affect small businesses and in no particular order:
VAT
The VAT threshold will remain unchanged, although the Government is still considering a change. Consultation in Summer 2018 amongst the professional bodies showed that most were against applying VAT to smaller businesses.
Making tax digital for VAT is still scheduled to come in from 1 April 2019.
Principal Private Residence Relief
At present taxpayers do not have to pay capital gains tax on a house they have lived in throughout the period of ownership. There are certain exemptions available if the house has not been occupied by the taxpayer for the whole of the ownership:
- The last 18 months are currently deemed to be occupations regardless of whether the taxpayer actually lived in the property. This is to be reduced to 9 months in most circumstances; and
- Letting relief which is currently a maximum of £40,000 will no longer be available unless the taxpayer has lived in the property with the tenant.
Both measures are due to take effect from April 2020.
Entrepreneurs Relief
The qualifying share holding period is to be extended from 12 to 24 months and two extra tests on the nature of the shares are to be introduced and the shares must have an interest in the net assets and distributable profits.
Please contact Clearways Accountants on the number above or by email if you would like further information on the Budget 2018