Budget Seminar Robert Maas, Tom Adcock, Toby Hermitage 30 November - - PowerPoint PPT Presentation

30 November 2017

Budget Seminar

Robert Maas, Tom Adcock, Toby Hermitage

Income tax - 1 Rates for 2018/19

• Personal allowance

£11,850 Basic rate band 34,500 So can earn before hitting 40% rate 46,350

• Dividend allowance

£2,000

• (Down from £5,000)

Income tax - 2 Partnerships

• Partnership must look through nominees
• In a chain of partnerships the partnership profit from the bottom

partnership must be “ring-fenced”

• Partnership shares must be calculated as per the partnership agreement

and then converted to a percentage

Income tax - 3 Partnerships (continued)

• The bottom partnership must calculate its profits in four alternative ways

UNLESS it knows the identity of everyone in the chain, so knows which is the appropriate calculation

• Partners MUST put the partnership return figures on their tax returns –

even if they think it is wrong.

• A partner will be given a right of appeal to the tax tribunal against the

division of partnership profits; but not against the amount to be divided.

Income tax - 4 Consultations planned

• Rent a room relief
• Does it support long term lettings?
• Withholding tax on royalties
• In what circumstances ought royalties paid to people outside the

UK attract UK tax

Income tax - 5 Venture capital schemes – EIS, SEIS, VCTs

• Can invest £2 million each year provided excess over £1 million is invested

in Knowledge Intensive Companies

• A Knowledge Intensive Company will be able to raise £10 million pa

(instead of £5 million) but the total EIS money it can raise is limited to £20 million

• For a Knowledge Intensive Company the 7 year period within EIS funds

must be raised, starts from the time turnover reaches £200,000 (instead

• f when turnover is first generated)

Income tax - 6 Venture Capital Schemes (continued)

• Consultation on a possible new Knowledge Intensive EIS fund structure
• Streamlining the advance assurance service
• Anomalies on commercial mergers to be removed
• Will only be able to use EIS in future where there is a real risk to the

capital being invested

• Companies will have to take all tax advantaged investments (including

before 2012) into account in arriving at its £12 million lifetime maximum

Income tax - 7 Trusts

• Consultation in 2018 on making trust taxation “simpler, fairer and more

transparent”

• From 6 April 2018 capital distributions from offshore trusts will be taxed
• n settlor if received by a close family member
• Payments to a non-resident beneficiary will be ignored for matching

purposes

• May be a window of opportunity

Employee taxation – 1

• Consultations on employee status and on employer-provided

accommodation and on self-funded training

• Better guidance on expenses
• Higher benefit charges on diesel cars
• Standard benchmark scale rates will no longer need to be vouched
• Overseas benchmark scale rates will become statutory
• Exemption for employer provided electricity

Employee taxation - 2

• Reform of tax treatment of termination payments
• Abolition of foreign service relief
• Will need to watch timing of return to the UK
• Disguised remuneration; correction of mistakes in last month’s legislation
• Save-as-you-earn pause for up to 12 months during pregnancy/paternity

leave

• Lifetime pensions allowance becomes £1,030,000 from 2018/19

Corporation tax - 1

• Rate remains 19% for 2017/18 to 2019/20
• Changes to corporate interest restriction
• Disincorporation relief not to be extended
• Increased large company R & D tax credit to 12%
• Restriction on DTR for losses
• Amendments to hybrids and other mismatches regime
• Anti-avoidance on related party step=up schemes for tangible fixed assets

Corporation tax - 2 Corporate capital gains

• Freezing of indexation allowance at 1 January 2018
• Depreciatory transactions: adjustment needed for transactions back to

31 March 1982

• Correct anomaly on transfer of assets to overseas subsidiary and

subsequent group re-organisation

Corporation tax - 3

• Non-resident companies to be moved from income tax/CGT to

corporation tax regime

• Will explore ways to further reduce phoenixism risks
• Explore with digital platforms opportunities to promote better tax

compliance by users

• Consultation on intangible fixed asset regime

Business tax

• Scale mileage rates for unincorporated businesses
• Extension of FYAs for zero emission vehicles/gas refueling equipment until

March 2021

• Extension to March 2023 of tax credits for water or energy efficient

equipment

• Consultation on tax effect of new accounting rules for leases
• Double tax relief: changes to TAAR and implementation of the Multilateral

Instrument

Capital gains tax - 1

• Annual exemption £11,700 for 2018/19
• Bringing forward payment date deferred until at least 2020
• Consultation on retaining entrepreneurs relief when holding diluted by

later issue of shares

• Removal of transitional rules on carried interest

Capital gains tax - 2 Taxing gains made by non-residents on UK immovable property

• From 1/5 April 2019
• NRCGT will apply to commercial as well as residential property
• Will apply to interests in widely-held entities even for residential property
• Will apply to a disposal of shares in an overseas company (or other entity)

where taxpayer owns at least 25% and 75% of gross assets of the company is UK immovable property

• Immediate forestalling rule to prevent treaty shopping
• Rebasing to 6 April 2019 (except for residential property already within

NRCGT or ATED related CGT)

Capital gains tax - 3 Taxing Gains of non-residents (continued)

• In considering the 25% test include shares held by connected persons and

shares disposed of in previous 5 years

• In applying the 75% must include assets of subsidiaries and investee

companies

• Must report disposal within 30 days of completion
• UK professional advisors to a transaction that could attract NRCGT must

notify HMRC of the transaction within 60 days of disposal unless satisfied that someone else has notified

Value added tax

• Registration threshold frozen at £85,000 for 2018/19 and 2019/20
• Extension of joint and several liabilities to online marketplaces
• Government is still thinking about a split payment model
• Consultation on VAT groups
• Reverse charge from 1 October 2019 for subcontractors in the

construction industry

• Change in tax treatment of vouchers
• Will consider cash flow problems of imports from EU after Brexit

Stamp Duty Land Tax - 1

• Exemption from SDLT for first time buyers buying homes for up to

£300,000

• With a relief for first £300,000 on those costing up to £500,000
• A first time buyer is an individual or individuals who have never owned an

interest in residential property in the UK or elsewhere and who intends to

• ccupy the property as their main residence
• Where there are joint purchasers all must be first time buyers who intend

to occupy

• It is not clear if a person intends to occupy as his main residence if he

intends to flat-share with tenants

Stamp Duty Land Tax - 2 Amendments to the 3% surcharge to

• Prevent abuse of replacement property relief by selling to one’s spouse or

retaining some interest in the property

• Disapply the 3% on a purchase from one’s spouse
• Disregard certain interests retained by a former spouse under a court
• rder made on a divorce or other dissolution
• Disregard a property owned by a child’s parents where a property is

bought by the child’s trustee appointed by eg the Court of Protection

Stamp Duty Land Tax - 3

• The filing and payment deadline will reduce to 14 days from completion

(from 30) from 1 March 2019

• The ATED rates increase by 3% for 2018/19 in line with inflation

Administration

• Further consultation on conditionality and the hidden economy
• Simplifying late submission and late payment sanctions
• Further consultation on a penalty points model
• Scrapping of certificates of tax deposit
• Extending assessing time limits to 12 years for offshore non-compliance

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ROBERT MAAS TAX CONSULTANT +44 (0)20 7309 3800 e: robert.maas@cbw.co.uk THOMAS ADCOCK TAX PARTNER t: +44 (0)20 7309 3856 e: thomas.adcock@cbw.co.uk TOBY HERMITAGE TAX PARTNER +44 (0)20 7309 3972 e: toby.hermitage@cbw.co.uk