This week’s Budget 2018 has brought a few changes in to effect individuals and businesses. We will summarise a few of these now and will revisit some of these topics in our future pieces to give more detail.
- The personal allowance will rise to £12,500 in April 2019, a year earlier than expected. However, national insurance, for those that pay it, still begins at the lower threshold. The basic rate band is extended to £37,500. In total, this allows earnings of £50,000 before paying higher rate tax.
- The National Living Wage will increase to £8.21 per hour from next April. The Minimum Wage will increase for age 21-24 to £7.70 per hour, age 18-20 £6.15, under 18 £4.35 and apprentice rate will increase to £3.90 per hour.
- Selling property you have lived in for the whole period of ownership usually is exempt from Capital Gains Tax if the property is your Principle Private residence (PPR). However, if you sell a property that you haven’t lived in the whole time can bring a charge to capital gains tax on the profit. There are reliefs which can lower this if you have lived in it for part of the period of ownership, one of these reliefs allows you to reduce the profit based on time you have lived in the property and, in addition, the last 18 months could count towards this even if you have moved out by that stage. It has been announced that this 18 month rule is being reduced to 9 months from April 2020. There is also another relief which allows you to reduce the capital gains tax if you have let the property out during ownership. This letting relief which was worth up to £40,000, will also be lost in most cases from April 2020.
- Capital Gains Tax on residential properties will also be payable within 30 days of completion of sale from April 2020, this brings the tax payable forward by up to 19 months in the most extreme case.
- Annual investment allowance is going to increase from 1st January 2019 for 2 years. Currently annual investment allowance allows a business to claim 100% tax relief on expenditure on certain plant and machinery used within the business. The current allowance gives 100% tax relief on £200,000 spent on capital expenditure in each financial year. The new allowance will give 100% relief on £1 million expenditure for a 2 year period from 1 January 2019.
- There is a new capital allowance for qualifying expenditure on structures and buildings. From 29th October 2018 new non-residential buildings will qualify for 2% capital allowances, similar to the old industrial buildings allowance. This will give 2% allowance on the cost of the building as tax relief for 50 years. The unused allowance will transfer with the transfer of ownership.
If you believe you may be affected by any of the above changes and wish to know more please contact Nickie and her team firstname.lastname@example.org