Off-payroll working in the private sector

After a detailed and lengthy consultation, the Government announced plans to reform the off-payroll working rules – known as IR35 – in the private sector from April 2020. Liability for operating the off-payroll working rules will now transfer to the firm engaging the contractor. However, small organisations will be exempt to ease the administrative burden for the vast majority of engagers, while medium and large organisations will be given support and guidance by HMRC.

Corporation tax

The corporation tax remains at 19% for 2019/20. The intention to cut the rate of corporation tax to 17% in 2020/21 was reiterated.

Research and development (R&D)

From 1 April 2020 the amount of R&D tax credit that a qualifying loss-making company can receive within a tax year will be capped to three times of company’s total PAYE and NIC liability for that year; however, this change is subject to consultation.

Employment allowance

Under the current rules the employment allowanceprovides employers with relief of up to £3,000 per tax year from their employers’ national insurance contributions (NICs) bill. However, it will be restricted to only those employers who had a NICs bill below £100,000 in the previous tax year.

Digital services tax

From April 2020, the Government will introduce a 2% tax on the revenues of certain digital businesses in an attempt to ensure the amount of tax paid in the UK is reflective of the value derived from their UK users. The tax will:

• apply to revenues generated from business activities which include search engines, social media platforms and online marketplaces
• apply to revenues from those activities that are linked to the participation of UK users, subject to a £25m annual allowance
• only apply to groups that generate global revenues from speciic business activities in excess of £500m per annum
• include a provision that exempts loss-making businesses and reduces the effective rate of tax on businesses with very low profit margins.

Personal allowance

The personal allowance increases from £11,850 to £12,500 from 6th April 2019. The allowance will also remain at this level until the 2020/21 tax year.

Basic-rate band

The basic-rate limit increases from £34,500 to £37,500 from 6 April 2019. Accordingly, this will increase the higher-rate tax threshold from £46,350 to £50,000. This limit will remain in place for the 2020/21 tax year.

Entrepreneurs’ relief

The Government has increased the minimum period for which certain conditions must be met in order for entrepreneur’s relief (ER) to be available from one year to two years. This measure will take effect for disposals made on or after 6 April 2019. The one-year qualifying period will continue to apply for business disposals made on or after 6 April 2019, provided that trade ceased before 29 October 2018. The Government also announced two new tests to the definition of a personal company in relation to the qualifying criteria for ER to be available. For disposals on or after 29 October 2018, all claimants must possess a 5% interest in both the distributable profits and the net assets of the company in order to be eligible to claim. These tests must be met for the specified period for relief to be obtainable.

Lettings relief

From April 2020, lettings relief will only be available in circumstances where the owner of the property is in shared occupancy with the tenant. Private residence relief Theinal period of exemption will be reduced from 18 months to nine months with effect from April 2020.

Capital gains tax

for non-UK residents from 6 April 2019, all non-UK resident persons disposing of UK immovable property will be liable to CGT on gains arising from interests in any type of UK land. In addition, all non-UK resident persons disposing of shareholdings in an entity that derives 75% or more of its gross asset value from UK land shall be taxed on any gains arising.

Registration threshold frozen until 2022

The VAT-registration threshold was previously frozen at £85,000 until 1 April 2020 in the last Budget, and the Chancellor extended that until 1 April 2022. HMRC had consulted on the VAT-registration threshold following suggestions from the Office of Tax Simplification.It is thought in some quarters that the registration threshold is a barrier to the growth of business and so this issue is likely to be revisited in subsequent Budgets. The Chancellor did state that he would be “looking at the possibility of introducing a smoothing mechanism once the terms of the EU exit are clear”. Until then the current VAT-registration threshold will remain as follows:

• A business must be VAT-registered when its taxable turnover in the last 12 months has exceeded £85,000 or is expected to exceed £85,000 in the next 30 days alone.
• A business may be able to avoid registration if the above limit has been exceeded, but it does not expect to exceed £83,000 in the next 12 months.

• A business may apply for deregistration if it can satisfy HMRC that its taxable turnover will fall below £83,000 in the next 12 months.