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UK Autumn Budget 2018: Business Owners

Business Tax - 29 Oct 2018

Business Owners

Off Payroll Working in the Private Sector

In order to bring the private sector in line with the public sector and agencies, the government will reform the off-payroll working rules (known as IR35) in the private sector. Responsibility for operating the off-payroll working rules will move from individuals (including those contracting via personal service companies) to the organisation, agency or other third party engaging the worker. To give people and businesses time to prepare, this change will not be introduced until April 2020. Small organisations will be exempt from the implementation of the new legislation.

Research & Development

From April 2020, the amount of payable R&D tax credit that a qualifying loss-making company can receive, in any tax year, will be restricted to three times the company’s total PAYE and NICs liability for that year. This is aimed at preventing abuse of R&D tax relief for small and medium-sized enterprises (SMEs).

Capital Allowances

With a view to stimulate capital expenditure by businesses,  from 1 January 2019 until 31 December 2020, Annual Investment Allowance (AIA) available to businesses for investment in qualifying plant and machinery will be increased from £200,000 to £1 million per annum.

However, businesses with capital expenditure in excess of this amount on assets falling in the ‘special rate pool’, or those with pre-existing assets in the special rate pool, will see a reduction in the capital allowance deduction rate from 8% to 6% from April 2019.

For businesses seeking to build new business premises, a new ‘Structures and Buildings Allowance’ (SBA) will also be introduced allowing for a 2% capital allowance deduction in respect of new non-residential structures and buildings. To be eligible contacts for the physical construction works must be entered into on or after 29 October 2018.

Corporate Capital Loss Restriction

A reform in corporation tax losses, from 1 April 2017,  saw a relaxation in the restriction of the use of corporate losses being carried forward.  However, to bring the rules for companies with capital losses in line with income losses, from 1 April 2020, the government will look to limit the use of brought forward capital losses that can be offset against capital gains to 50%.  There will continue to be an annual allowance of up to £5 million capital or income losses available to companies.

VAT

As expected, VAT registration thresholds to be frozen at current level (£85,000 per annum) for a further two years until April 2022.

Apprenticeships

The government will introduce a package of reforms to strengthen the role of employers in the apprenticeship programme, a part of this:

  1. The government will enable levy paying employers to transfer up to 25% of their funds to pay for apprenticeship training in their supply chains.
  2. The government will halve the co-investment rate for apprenticeship training to 5%.

Read the full report
In a Budget to signal the coming of the end of austerity Philip Hammond announced measures to increase public spending in particular to provide a boost to the NHS, Highway’s Agency and Counter Terrorism policing. 

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