Posted on 22nd November 2017
The detail behind today’s speech offered a lot of new consultations and delayed implementation dates to beyond 2019, which seems to me a ‘wait and see’ how the Brexit negotiations go before finalising a lot of changes.
The speech itself ended with a grand finale announcing the abolition of stamp duty for first time buyers of residential property purchases up to £300k.
VAT Registration Threshold
This will be frozen at £85k for 2 years until 31 March 2020. In the meantime the threshold will be reviewed to establish how it might incentivise businesses further. It is true that many businesses selling to consumers deliberately stay under the threshold to avoid the administration and not to increase prices to their customers. With inflation, freezing the threshold itself might force many businesses to become VAT registered. If so, it’ll be a good time to review business models and how to grow successfully.
Travel and Subsistence
From 6 April 2019, the overseas travel and subsistence allowances can be paid when on a business journey without needing to prove that some expenditure has been incurred by employees. This is a very welcome administration saving. A similar approach will be taken for UK subsistence rates.
Research and Development
A pilot advanced clearance service will be available for SMEs to encourage them to make more claims. This is an excellent relief, but as usual there are some complicated parts which make many would-be claimants uninterested. Simplification is the real answer here.
Sometimes this valuable 10% capital gains tax rate isn’t available where new shares are issued at the same time as the founder is selling his/her final few shares. This issue will be looked at to see whether entrepreneurs can be encouraged ‘to remain involved in their businesses after receiving external investment’ presumably for the next phase of business growth.
Enterprise Investment Relief
This change is effective a year earlier in April 2018 and will help businesses raise more much needed capital by doubling the tax efficient thresholds, but it comes with a price of more complication. HMRC is very quick to withdraw this relief for the smallest of reasons such as using the wrong form. As mentioned above, simplification at the same time would be very welcome for the busy growing business.
Intangible Fixed Assets
These have suffered many adverse tax changes recently and this will be reviewed to see whether UK companies can be better incentivised.
AKA How can the government make sure it doesn’t lose out from the new flexible economy? The Matthew Taylor review will be consulted on to prevent the Chancellor from suddenly announcing an increase to Class 4 National Insurance, or similar, in the future. The delay to April 2019 in abolishing Class 2 National Insurance had already been announced.
The possibility of extending the responsibility of deciding whether your supplier is really an employee from the public sector to the private sector will also be consulted on with the results due in 2018. This will be a worry to the many consultants who genuinely work on different projects for different clients and don’t require or want any employment related benefits.
Making Tax Digital
Nothing new here except to confirm the delayed timetable to April 2019 for VAT registered businesses with a turnover of over £85k and to at least April 2020 for other businesses and individuals.
Stamp Duty Land Tax
The house building, estate agent and related industries presumably will benefit from the abolition of stamp duty land tax for purchases of residential property up to £300k. Stamp duty is driven by completion dates so even if you’ve already exchanged, you will benefit now from this change on completion.
Companies Capital Gains Tax Indexation
This often valuable additional tax deduction for companies on the sale of an asset will be frozen at December 2017 inflation rates. This seems to be a further attack on residential properties where many buy-to-let landlords are incorporating in response to earlier adverse property tax changes.
Residential Property Capital Gains Tax Payment Date
The much reduced payment window to only 30 days will be deferred until April 2020, a welcome delay and perhaps not a government priority for now.
Many other initiatives were announced to make the UK Brexit-ready and to encourage house building. These were the main themes, but we can always expect anti-avoidance measures to be in Budgets for the foreseeable future. There were several of these, such as taxing Royalties from UK sales in the UK, which don’t affect most SME businesses.
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