Top 5 things to discuss with your clients
Following last months Budget we’ve compiled a short list of the key issues that we would like to bring to your attention.
If you’d like to pick anything specific up with our team then please get in touch with Martyn@chrisduckett.co.uk
- Business investment - Capital allowances, R&D & amortisation of intangibles
- AIA is increased to £1m for the two calendar years 2019 and 2020.
- Immediately, a new Structures & Buildings Allowance (SBA) is introduced at a WDA rate of 2% on new non-residential buildings (this seems to be a re-introduction of industrial buildings allowances but extended to offices and farm buildings).
- From April 2019 the plant and machinery that qualifies for special rate allowances will receive relief at 6% (reduced from 8% currently). This also applies to integral features of buildings and may mean the SBA introduction is fairly neutral in many cases.
- From April 2020, a restriction on the amount of R&D tax credit repayable on the surrender of a loss to the amount limited to three times the PAYE / NIC payable.
- From April 2019, a new targeted relief for the cost of goodwill on the acquisition of businesses (more details expected on 7 November).
- Business disposals - Entrepreneurs’ relief changes
- From April 2019 the qualifying period for entrepreneurs’ relief will increase from 12 months to 2 years.
- Immediately, two new conditions are added to the definition of “personal company”, in addition to the existing share capital and voting rights conditions. These are:
- The individual must be entitled to at least 5% of the company’s distributable profits, and
- 5% of its assets available for distribution to equity holders in a winding up.
- Multiple properties - Main residence relief changes
- From April 2020, the final 18 months deemed occupation period reduces to nine months.
- From April 2020, lettings relief (currently worth a maximum of £40,000 relief or £80,000 for joint owners) will be restricted to when the owner is in shared occupation with the tenant only, however
- Shared occupancy test for rent-a-room relief has been shelved/delayed for now.
- Profit extraction and income planning
- From April 2019, personal tax allowance increases to £12,500, basic rate band increases to £37,500 which makes the higher rate threshold £50,000. These amounts are unchanged for 2020/21 and are set to increase in line with inflation from 2021/22.
- From April 2020, corporation tax reduces to 17% (already legislated).
- Profit Fragmentation - from April 2019 a new anti-avoidance regime targets arrangements where business profits are shifted out of the UK by UK resident individuals and / or companies.
- Personal services companies
- From April 2020, the responsibility for applying the IR35 rules will be put onto larger private sector employers rather than just public sector bodies as currently.