Autumn Budget Overview Measures to stimulate house building SDLT - - PowerPoint PPT Presentation

• Measures to stimulate house building
• SDLT abolished for first time buyers up to £300,000
• More money for infrastructure projects
• Measures to discourage diesel cars and encourage

electric and hybrid cars

• Indexation of gains frozen for companies
• VAT threshold held at £85,000 for 2 years
• More on tax evasion and avoidance

Autumn Budget Overview

Income tax and NIC 2018/19

£150,000 £46,350 £11,850

45%, 38.1%(div) 20%, 7.5%(div)

I n c o m e t a x b a n d s £46,350 £8,424 UEL Earnings threshold 9%, 12%, 13.8% 2%, 2%, 13.8% N I C b a n d s (SE, E’ee, E’er) Personal allowance

40%, 32.5%(div)

Income tax and NIC 2020/21

£150,000 £50,000 £12,500

45%, ?38.1%(div) 20%, ?7.5%(div)

I n c o m e t a x b a n d s £50,000 ???? UEL Earnings threshold 9%, 12%, 13.8% ? 2%, 2%, 13.8%? N I C b a n d s (SE, E’ee, E’er) Personal allowance

40%, ?32.5%(div)

Falling corporation tax rates:

FY2016

• 20%

FY2017

• 19%

FY2018

• 19%

FY2019

• 19%

FY2020

• 17%

G20 Corporation Tax rates

Tax driven incorporation?

• Government concerned about rise in new companies
• Just for tax reasons?
• Looking to level the playing field
• No mention of “Look-through” entity proposal
• Considering extending IR35 public sector rules to

private sector

• Budget 2017 - from 2018/19:
• £5,000 dividend allowance cut to £2,000

Huge increase in tax-driven incorporation

'Worker' 'Intermediary'

Service company/partnership

'Client'

Public sector workers “Off payroll”

• Government departments, legislative bodies, armed

forces

• Local government
• NHS ( but not GPs)
• Schools and further and higher education institutions
• Police forces
• Other public bodies (such as BBC, Channel 4)

Public sector workers “Off Payroll”

• From April 2017, individuals working through a

personal service company (“PSC”) in the public sector will no longer be responsible for deciding whether the intermediaries legislation applies

• The public sector employer/agency will have to

decide if the rules apply to a contract and, if so, account for and pay the liabilities through RTI and deduct the relevant tax and NICs.

Public sector workers “Off Payroll”

• House of Commons Work and Pensions Committee
• “bogus” self-employment practices- burden welfare

state but reduce the tax contributions to sustain it.

• Followed an inquiry into companies such as Uber,

Amazon, Hermes and Deliveroo.

• The Committee recommended a default assumption
• f “worker” status, rather than “self-employed”
• Taylor report focussed more on workers rights and

recommended new status of “dependent contractor”

Taylor report on “Gig” Economy

Employee Self-employed Own company Salary/ fees £40,000 £40,000 £40,000 Income tax 20% 5,800 5,800 NIC 3,833 3,020 350 NIC – ERs 4,401 (398) Corporation tax 5,721 Dividend tax 1,341 Total taxes 14,034 8,820 7,810 NET for worker £30,367 £31,180 £32,190

Employee v Self employed v Own co. 16/17

• £11,850 salary each
• Then dividends, say £34,500 each (£46,350)
• No tax on salary (just ‘EEs NIC – 2018/19 £411)
• Just £2,000 dividends tax free
• Then 7.5% on £32,500 = £2,437 each
• £4,875 IT for the couple = £87,003 net
• Corporation tax on £69,000 PAT = £16,185 (19%)
• PBT £85,185 + salaries = £108,885 (20.1% tax and NI)
• Note: No £3,000 employment allowance for single

director companies

H & W companies – 2018/19

14

• £108,885 profit, say £54,442 each
• £11,850 @ Nil
• £34,500 @ 20% = £6,900 )
• £8,092 @ 40% = £3,237) IT £10,137 each
• Class 2 (last year) £153 each)
• Class 4 :
• 9% on (£46,350 - £8,424) = £3,413 ) £3,723 each
• 2% on £8,092 = £157 )
• Net, after income tax, NIC = £81,164 (25.5% Tax + NI)
• Same if company taxed on “Look Through” basis?

H & W partnership 2018/19

• £1,185 (10%) of unused personal allowance can be

transferred to spouse if basic rate taxpayer

• Now applies in year spouse dies (backdated 4 years)
• Buy to let landlords can claim mileage allowance (45p)

for visits to property

• Changes to taxation of partnership profit alloacation
• EIS tax relief doubled for knowledge based companies
• EIS and VCT relief will exclude companies and

arrangements intended to provide ‘capital preservation’

Other personal tax measures

• Normal EIS annual investment limit £1 million – 30%
• EIS annual investment limit £2 million provided any

amount over £1 million is invested in one or more knowledge-intensive companies.

• The annual investment limit for knowledge-intensive

company will be increased to £10 million (from £5m)

• Lifetime limit raised by such companies £20 million

EIS tax relief doubled for Tech Cos.

• Government will consult in 2018 on how to tackle non-

compliance with the intermediaries legislation (IR35) in the private sector. Extend public sector rules?

• Termination payments – foreign service relief abolished
• Diesel car benefit supplement 4% from 2018/19
• No benefit if employees charge own electric car at work
• Note major car benefit changes 2020/21…

Employment tax changes

• From April 2018:
• all PILONs will be subject to tax and NICs as earnings;
• all other post-employment payments which would have

been treated as general earnings if the employee had worked their notice period will be subject to tax and Class 1 NICs, including employer's NICs; and

• payments relating directly to the termination of the

employment will have a £30,000 income tax and employer NICs exemption. Unlimited employee NICs exemption on termination payments to continue?

Tax and NIC on termination payments

CO2 g/km 2016/17 2017/18 2018/19 2019/20 Zero 7% 9% 13% 16% 1-50g 7% 9% 13% 16% 51-75g 11% 13% 16% 19% 76-94g 15% 17% 19% 22% Then each 5g +1% +1% +1% +1% 185-189g 34% 35% 36% 37% 190-194g 35% 36% 37% 37% 195-199g 36% 37% 37% 37% Max 200g + 37% 37% 37% 37%

Car Benefit Changes to 2019/20

CO2 g/km 0% Range (miles) % of list price Zero n/a 2% 1-50g >130 miles 2% 70-129 5% 40-69 8% 30-39 12% < 30 miles 14% 51-54g n/a 15% Then each 5g +1% Maximum at 160g+ 37%

Car Benefit Changes to 2020/21

Nissan Leaf £21,680 – CO2 Nil, Range 124 miles = 2%

BMW i3 £30,980 – CO2 12g, Range 181 miles = 2%

BMW i8 £104,550 – CO2 49g, Range 22 miles = 14%

Tesla Model S £62,380 CO2 NIL, Range 248 miles 2%

100% FYA

And you’ll need one of these….

• Lifetime limit 2018/19 £1,030,000
• Normal pension annual allowance £40,000 a year
• (plus unused relief from previous 3 years)
• Tapered for those with high income (£150,000)
• If in flexible drawdown annual allowance was £10,000
• £10,000 limit reduced to £4,000 from 6 April 2017 on

contributions to money purchase fund where in flexible drawdown

He didn’t touch pensions!

• Rate confirmed 19% => 17% FY 2020
• Indexation allowance frozen on corporate Capital Gains

for disposals on and after 1 January 2018. (RPI to December 2017)

• DTR restricted where the company has received relief in

the foreign jurisdiction for the losses of the PE against profits other than those of the PE

• R&D expenditure credit (non SMEs) increased to 12%

Corporation tax changes

PATENT INVENTION 230% relief for costs 10% corp tax (if SME) Patent box 12% credit for non SME

Tax breaks for innovative companies

R&D PHASE “Super” profits

• Annual CGT exemption increased by £400 to £11,700
• £5,850 available to trustees
• No change in rates of CGT
• Non-residents to pay CGT on all disposals of

immovable UK property (residential from 6 April 2015)

• Rules for fund managers’ “carried interest” tightened up
• No change in IHT nil rate band £325,000 nor rates
• Additional nil rate band for family home £100,000 from

6 April 2017 => £175,000 in 2020

Capital Taxes

• Additional IHT relief for family home, phased in:
• £100,000 – 2017/18
• £125,000 – 2018/19
• £150,000 – 2019/20
• £175,000 – 2020/21
• Then increased with CPI

IHT Family Home Allowance

• VAT registration limit frozen at £85,000 to 1.4.2020
• Online marketplaces jointly and severally liable for:
• VAT that a UK business selling goods via the online

marketplace fails to account for after HMRC has issued a notice ensuring that all sellers are in scope

• any VAT that a non-UK business selling goods via the
• nline marketplace fails to account for, where the

business was not registered for VAT in the UK and that

• nline marketplace knew or should have known that that

business should be registered for VAT in the UK

VAT changes

• Applies to purchases completed on/after 22 November
• No SDLT up to £300,000
• Thereafter 5%
• But normal SDLT rates if purchase price > £500,000
• If joint purchase must be first property owned by all

buyers

• Also – relief from 3% supplementary charge on second

homes relaxed for certain transactions

SDLT abolished for first-time buyers

ATED rates from 1 April 2018:

Property value ATED charge £500,000 < £1m £3,600 p.a. £1m < £2m £7,250 p.a. £2m < £5m £24,250 p.a. £5m < £10m £56,550 p.a. £10m < £20m £113,400 p.a > £20m £226,950 p.a.

• Further measures to block disguised remuneration (EBT)

schemes

• Offshore trusts – to ensure that payments from an offshore

trust intended for a UK resident individual do not escape tax when they are made via an overseas beneficiary or a remittance basis user

• Intangibles - to ensure licence arrangements between a

company and related party in respect of IFAs are at MV

• Customs powers extended to allow them to search any

container or vehicle where a customs offence is suspected

More Anti-Avoidance

35

EBT Loan Scheme

COMPANY TRUST LOANS Sub Trusts Taxable

HMRC beat Rangers at Supreme Court

• Simpler Gift Aid donor benefit rules
• Employees on maternity leave to be able to pause up to 12

months from saving into their SAYE share scheme

• Employee expenses simplification:
• Overseas subsistence scale rates to be statutory
• Employers no longer required to check receipts where

scale rates paid

• Merely need to check that qualifying business travel
• Disincorporation relief abolished 31 March 2018

Future tax changes

39

• 100% FYA for energy-saving technology list (ETL) items
• 3 new technologies added to the list:
• evaporative air coolers,
• saturated steam to electricity conversion and
• white LED lighting modules for backlit illuminated signs
• Modify nine existing technologies to reflect technological

advances and changes in standards

• Remove Localised Rapid Steam Generators and Biomass

fired Warm Air Heaters

• Repayable credit reduced to 2/3 CT rate 19% = 12.67%

Energy saving technology and First Year Tax Credits – from 1 April 2018

40

• 30-day payment window for CGT on residential property

disposals deferred until April 2020

• SDLT filing and payment window to be reduced from 30

days to 14 days to be delayed until 1 March 2019

• Will apply to land transactions with an effective date on and

after 1 March 2019.

New payment dates for Property Disposals

41

• New accreditation system to allow investment in care homes

under Social Investment Tax Relief

• Streamline advance assurance of venture capital schemes
• Taxation of trusts
• Employment status / “Gig” economy
• Tax relief for employees for non-reimbursed expenses
• Tax treatment of leases following GAAP changes
• Intangible Fixed Asset tax relief

Key Consultations

43