Autumn UK Budget

We have taken a look at some of the key changes announced by the UK Government that specifically affect the offshore world.

Income Tax

• The personal allowance will rise to £12,500 for 2019/20.
• The higher rate band for income tax will rise to £50,000 for 2019/20.
• The National Living Wage will increase from £7.83 an hour to £8.21 an hour.

 Capital Gains Tax

• The annual exempt amount will rise to £12,000 for 2019/20.
• The deemed final period of ownership for Principal Private Residence Relief is being reduced from 18 months to 9 months.
• Lettings relief under Principal Private Residence Relief is being restricted so that is only available to those who are in shared occupancy with a tenant, from April 2020.
• The extension of Non-Resident Capital Gains Tax to non-residential land is confirmed as going ahead, effective April 2019.
• The conditions for entrepreneurs’ relief have been tightened. The individual disposing of shares in a trading company must have a 5% interest in the distributable profits and net assets of the company, as well as the existing rules about 5% of the ordinary share capital and voting rights. These conditions must also be met for a minimum of two years, an increase on the current 12 months, for disposals after 6 April 2019.

 Stamp Duty Land Tax

• SDLT surcharge has been proposed for non-residents buying residential property. It has been suggested at 1% and a consultation document will be published in January 2019.
• The time limit to file the SDLT return and pay any SDLT due has been reduced from 30 days to 14 days from the date of transaction.
• The time limit that taxpayers have to reclaim the additional SDLT paid on a second home, when selling their old home after purchasing a new one, has been extended from 3 months to 12 months.

 Corporation Tax

• It has been confirmed that, from April 2020, non-resident companies carrying on a UK property business will be charged to Corporation Tax rather than Income Tax.
• The annual investment allowance is increasing from £200,000 to £1 million for two years from 1 January 2019.
• The writing down allowance for the special rate pool has been reduced from 8% to 6%.
• A straight line 2% capital allowance will be available on the cost of new non-residential property for contracts entered into on or after 29 October 2018.

 Inheritance Tax

• The additional nil rate band for main residences will rise to £150,000 from 2019/20. This will rise to £175,000 in 2020/21 where it will remain per the Summer Budget 2015. From 2020/21, an individual will have a nil rate band of £500,000 available on their main residence, if it is under £2 million.

 VAT

• The VAT registration and deregistration thresholds will remain unchanged at £85,000 and £83,000 for two years from 1 April 2020.

 Other

• From April 2020, a new 2% digital services tax on UK revenues of big technology companies will be introduced.

 Further details of all the tax-related changes in the Budget can be found here.

To discuss any of these changes in further detail please contact Hannah.