2018-19 Tax Data
Autumn Budget Report 2018
This Report, which was written immediately after the Chancellor of the Exchequer delivered his Budget Speech, is intended to provide an overview of the latest announcements and recent measures most likely to affect you or your business.
With the UK set to leave the European Union in March 2019, Chancellor Philip Hammond announced an early Autumn Budget, in a bid to avoid a clash with the final stages of Brexit negotiations.
Throughout this guide we have included tips and ideas to assist you with effective tax and financial planning. We can help to ensure that your financial plans remain effective, even as your personal and business circumstances change. We will work alongside you to help you achieve a rewarding and financially secure future.
Please note: while most taxation changes take effect from the start of the new financial year, or tax year, some may not take effect until 2020, or later. Where relevant, details of these changes have been included in this Report.
Hammond delivers pre-Brexit Budget for a ‘brighter future’
Chancellor Philip Hammond has delivered his second Autumn Budget, exactly five months before Britain is due to leave the European Union.
The Chancellor was in bullish mood, asserting tvhat the era of austerity is ‘finally coming to an end’ after a ‘long, hard journey’. However, he maintained that UK debt remains too high and highlighted the importance of continuing to reduce debt and borrowing.
Citing the latest economic forecasts from the Office for Budget Responsibility, Mr Hammond revealed that the UK growth forecast has been upgraded from 1.3% to 1.6% for 2019, while public borrowing in 2018/19 is set to be £11.6bn lower than previously forecast at the time of the Spring Statement.
With the Brexit negotiations ongoing, the Chancellor announced an additional £500m of departmental funding for Brexit preparations. He also raised the possibility of upgrading the 2019 Spring Statement to a ‘full fiscal event’ if no deal was agreed.
Key announcements for businesses include a two-year cut in business rates for small retail properties in England from April 2019, worth £900m, together with a £675m fund to help rejuvenate high streets. The Annual Investment Allowance will also increase from £200,000 to £1m for a period of two years.
Meanwhile, individual taxpayers are set to benefit from a bringing forward of the planned increase in the income tax personal allowance, which will rise by a further £650 in April 2019 to £12,500. The higher rate threshold will also increase from £46,350 to £50,000. However, from 2021, both thresholds will rise in line with CPI inflation.
The stamp duty relief for first-time homebuyers will be extended to shared equity purchases of up to £500,000, while the lifetime allowance for pension savings will increase to £1,055,000.
As widely anticipated, the Chancellor confirmed plans to introduce a new tax on the UK revenues of digital services companies from 2020, applying to those with global sales of more than £500m per annum. However, plans for a tax on takeaway coffee cups were overruled in favour of a new tax on plastic packaging containing less than 30% recycled material.
Turning to duties, tax on beer, most cider and spirits have been frozen. Wine duty will rise in line with inflation, while tobacco duty will continue to rise by inflation plus 2%.
Other announcements include confirmation of an extra £20.5bn for the NHS over the coming five years, together with additional funding to help welfare claimants transfer to Universal Credit. An additional £950m will be made available for the Scottish government, £550m for the Welsh government and £320m for the Northern Ireland Executive for the period to 2020/21.
- Two-year cut in business rates for small retail properties from April 2019
- Increase in personal allowance brought forward to April 2019
- Annual Investment Allowance increasing to £1m
- New 2% Digital Services Tax to be introduced from 2020
- Stamp duty exemption for first-time buyers extended to shared equity homes
- New tax on non-recycled plastic packing
- VAT threshold to remain unchanged until April 2022
- Access to Employment Allowance restricted from April 2020
Business Tax and Investment Incentives
Corporation tax rates are as follows:
|Financial Year from||1 April 2018||1 April 2019||1 April 2020|
|Corporation tax rate||19%||19%||17%|
Annual Investment Allowance (AIA)
The AIA will be temporarily increased from £200,000 to £1m. This change will have effect in relation to qualifying expenditure incurred from 1 January 2019 to 31 December 2020.
Capital allowances – special rate pool
The rate of writing down allowance on the special rate pool of plant and machinery will be reduced from 8% to 6%. The new rate will be effective from 1 April 2019 for businesses within the charge to corporation tax and 6 April 2019 for businesses within the charge to income tax.
Structures and Buildings Allowance (SBA)
The government will introduce a new SBA to provide relief for qualifying expenditure on new non-residential structures and buildings. Relief will be available for eligible expenditure incurred where all contracts for the physical construction works are entered into on or after 29 October 2018. Relief will not be available for the costs of land or dwellings. The SBA will be available at an annual rate of 2%. This will be at a flat rate, calculated on the amount of original construction expenditure. There will not be a system of balancing charges or balancing allowances on a subsequent disposal of the asset. Instead, a purchaser will continue to claim the annual allowance of 2% of the original cost.
First Year Allowances (FYAs)
Legislation will be introduced to end the FYA and first year tax credits for products on the Energy Technology List and the Water Technology List from April 2020.
The current 100% FYA for expenditure incurred on electric charge-point equipment will be extended for a further four years. It will expire on 31 March 2023 for corporation tax and 5 April 2023 for income tax purposes.
Corporate capital loss restriction
The government will legislate to restrict companies’ use of carried forward capital losses to 50% of capital gains from 1 April 2020. The measure will include an allowance that provides companies unrestricted use of up to £5m capital or income losses each year. An anti-forestalling measure to support this change will have effect on and after 29 October 2018.
Research and Development (R&D) tax relief
A limit will be introduced on the amount of payable tax credit that can be claimed by a company under the R&D SME tax relief. The limit will be set at three times the company’s total PAYE and NICs payment for the period. The change will have effect for accounting periods beginning on or after 1 April 2020. Any loss that a company cannot surrender for a payable credit can be carried forward and used against future profits.
Digital Services Tax
From April 2020, the government will introduce a new 2% tax on revenues of certain digital businesses which derive value from their UK users.
The tax will:
- apply to revenues generated from the provision of 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 per annum allowance
- only apply to groups that generate global revenues from in-scope business activities in excess of £500m per annum
- include a safe harbour provision that exempts loss-makers and reduces the effective rate of tax on businesses with very low profit margins.
UK property income of non-UK resident
As previously announced, from 6 April 2020, non-UK resident companies that carry on a UK property business, or have other UK property income, will be charged to corporation tax, rather than being charged to income tax as at present.
Legislation will be introduced to increase the small trading tax exemption limits. These limits apply to trading that does not relate to the charity’s primary purpose. The current exemption threshold of £50,000 will be changed to £80,000 and the lower band changed from £5,000 to £8,000. The changes will have effect on and after 6 April 2019 for unincorporated charities and from 1 April 2019 for incorporated charities.
Corporate intangible fixed assets regime
The government will publish detailed proposals on how it intends to partially reinstate relief for acquired goodwill in the acquisition of businesses with eligible intellectual property. It will also alter the regime’s de-grouping charge rules so that a charge will not arise where de-grouping is the result of a share disposal that qualifies for the Substantial Shareholding Exemption. The changes to the de-grouping rules will have effect in relation to de-groupings occurring on or after 7 November 2018.
Off-payroll working rules
Responsibility for operating the existing off-payroll working rules, and deducting any tax and NICs due, will move from individuals to the organisation, agency or other third party paying an individual’s personal service company. Small organisations will be exempt. This change will come into effect from 6 April 2020.
The government will legislate to restrict access to the NICs Employment Allowance to employers with an employer NICs liability below £100,000 in their previous tax year. Where employers are connected under the Employment Allowance rules the threshold will apply to their aggregated liability. This will take effect from 2020.
IHT is currently charged at 40% on the proportion of an individual’s estate exceeding the ‘nil-rate band’ of £325,000. Married couples and registered civil partners can pass any unused nil-rate band to one another on death.
A residence nil-rate band (RNRB) now applies in addition to the nil-rate band, allowing a current or former ‘family home’ to be passed wholly or partially tax-free on death to direct descendants.
The RNRB rates are set as follows:
There is a tapered withdrawal of the RNRB for estates valued at more than £2m, at a withdrawal rate of £1 for every £2 over this threshold.
IHT: changes to RNRB
The RNRB is intended to make it easier to pass on the family home to direct descendants without an IHT charge. A new measure introduces minor technical amendments to the RNRB relating to downsizing provisions and the definition of ‘inherited’ for RNRB purposes. These amendments clarify the working of the downsizing rules, and provide certainty over when a person is treated as ‘inheriting’ property.
This measure will ensure that the RNRB is working in line with the original policy intent, meaning that it cannot be claimed outside of the intended scope and removing any uncertainty for taxpayers.
Capital gains tax (CGT)
|Higher rate/additional rate||20%||20%|
Higher rates (18%/28%) may apply to the disposal of certain residential property and carried interest.
Entrepreneurs’ Relief and Investors’ Relief
The first £10m of lifetime qualifying gains for each relief are charged at 10%. Gains in excess of the limit are charged at the rates detailed above.
Entrepreneurs’ Relief: minimum qualifying period extension
A new measure increases the minimum period throughout which certain conditions must be met to be eligible for Entrepreneurs’ Relief from one year to two years.
This measure affects individuals who dispose of all or part of their business, individuals who dispose of shares in their personal company on or after 6 April 2019, and trustees who dispose of trust business assets.
It will have effect for disposals on or after 6 April 2019, except where a business ceased before 29 October 2018. Where the claimant’s business ceased, or their personal company ceased to be a trading company (or the holding company of a trading group), before 29 October 2018, the existing one year qualifying period will continue to apply.
Entrepreneurs’ Relief: definition of a ‘personal company’
A new measure adds two new tests to the definition of a ‘personal company’.
Both conditions, as well as the existing ‘share capital’ and ‘voting rights’ conditions must be met throughout the specified period. The new conditions require the individual to be beneficially entitled to at least:
- 5% of the company’s distributable profits
- 5% of its assets available for distribution to equity holders in a winding up.
The measure has effect for disposals on or after 29 October 2018.
Taxing gains made by non-residents on UK immovable property
This measure is intended to ensure equal treatment between UK residents and non-UK residents on disposals of UK immovable property.
It extends the scope of the UK’s taxation of gains accruing to non-UK residents to include gains on disposals of interests in non-residential UK property.
It also extends the charge on gains on disposals of interests in residential property to diversely held companies, those widely held funds not previously included, and to life assurance companies.
The measure also taxes non-UK residents’ gains on interests in UK property rich entities (for example, selling shares in a company that derives 75% or more of its value from UK land).
The measure will have effect for disposals made on or after 6 April 2019. Anti-forestalling measures are in place.
CGT payment window
UK residents will be required to make a payment on account of CGT following the completion of a residential property disposal. The new legislation will also replace and extend the existing reporting and payment on account rules for non-UK residents.
The above changes to the legislation will apply to disposals by non-UK residents on or after 6 April 2019. For UK residents the changes will have effect for disposals on or after 6 April 2020.
CGT private residence relief: reform of ancillary reliefs
From April 2020 the government will make two changes to private residence relief. The final period exemption will be reduced from 18 months to nine months. There will be no changes to the 36 months that are available to disabled persons or those in a care home.
Lettings relief will be reformed so that it only applies in circumstances where the owner of the property is in ‘shared-occupancy’ with a tenant.
Alcohol and tobacco duties
The duty rates will be frozen for:
- duty rates on beer
- duty rates on spirits and other drinks above 22% alcohol by volume (abv)
- duty rates on still cider and perry, and lower strength sparkling cider and perry.
The duty rates on wine and made-wine at or below 22% abv, and high strength sparkling cider above 5.5% abv will rise by RPI inflation from 1 February 2019.
The duty rate on all tobacco products will continue to increase by 2% above RPI inflation. It was also announced that hand-rolling tobacco will rise by an additional 1%, to 3% above RPI inflation this year. The new tobacco duty rates will have effect from 6pm on 29 October 2018.
Air Passenger Duty (APD)
The long haul rates of APD for the tax year 2020/21 will increase in line with the RPI as forecast at Autumn Budget 2018. Short haul rates will not rise.
Previous plans for the Scottish government to replace APD with Air Departure Tax have been deferred, pending the resolution of issues relating to the exemption for flights departing from the Highlands and Islands.
Fuel duty will be frozen for the 2019/20 tax year.
Stamp Duty Land Tax (SDLT) and first-time buyers relief
As from 22 November 2017, first-time buyers in England and Northern Ireland paying £300,000 or less for a residential property pay no SDLT. First-time buyers paying between £300,000 and £500,000 pay SDLT at 5% on the amount of the purchase price in excess of £300,000.
This Budget announced an extension to first-time buyers relief in England and Northern Ireland so that all qualifying shared ownership property purchasers can benefit, whether or not the purchaser elects to pay SDLT on the market value of the property. This change will apply to relevant transactions with an effective date on or after 29 October 2018, and will also be backdated to 22 November 2017 so that those eligible who have not previously claimed first-time buyers relief will be able to amend their return to claim a refund.
National Minimum Wage and National Living Wage
Increases in the National Minimum Wage and National Living Wage rates now occur in April each year. The rates applying from 1 April 2019 are outlined below.
|Apprentices*||16 and 17||18 – 20||21 – 24||25 and over|
|National Minimum Wage||£3.90||£4.35||£6.15||£7.70||–|
|National Living Wage||–||–||–||–||£8.21|
*Under 19, or 19 or over and in the first year of their apprenticeship.
Income Tax and Personal Savings
Income tax rates and bands
|Band £||Rate %||Band £||Rate %|
|0 – 37,500||20||0 – 34,500||20|
|37,501 – 150,000||40||34,501 – 150,000||40|
|Over 150,000||45||Over 150,000||45|
|Savings allowance basic rate||£1,000||£1,000|
|Savings allowance higher rate||£500||£500|
A starting rate for savings band of £5,000 at 0% may be available unless taxable non-savings income exceeds the starting rate band.
|Dividend ordinary rate||7.5%||7.5%|
|Dividend upper rate||32.5%||32.5%|
|Dividend additional rate||38.1%||38.1%|
|Personal Allowance (PA)||£12,500||£11,850|
|Personal allowance income limit||£100,000||£100,000|
Transferable between certain spouses where neither pay tax above the basic rate
|Married couple’s allowance (MCA)
(relief given at 10%)
Either partner born before 6 April 1935
– minimum amount
– income limit
|Blind person’s allowance||£2,450||£2,390|
Scottish income tax rates and bands
Savings and dividend income are taxed using UK rates and bands.
|Rates and bands for 2019/20 will be announced in the Scottish Budget||Band £||Rate %|
|0 – 2,000||19|
|2,001 – 12,150||20|
|12,151 – 31,580||21|
|31,581 – 150,000||41|
Welsh income tax rates
From 6 April 2019, the UK government will reduce the basic, higher and additional rates of income tax paid by Welsh taxpayers by 10%, and three Welsh rates of income tax will then be added to the reduced UK rates. The Welsh government proposes to set the first Welsh rates at 10%.
Individual Savings Accounts (ISAs)
Individuals can invest in any combination of cash or stocks and shares up to the overall annual ISA subscription limit. However, a saver may only pay into a maximum of one Cash ISA, one Stocks and Shares ISA, one Innovative Finance ISA and one Lifetime ISA. The overall investment limit for 2019/20 is £20,000 (£4,368 for junior accounts).
Value Added Tax
|From||From 1 April 2019||From 1 April 2018|
|Annual Registration Limit||£85,000||£85,000|
|Annual Deregistration Limit||£83,000||£83,000|
VAT: treatment of vouchers
The government will implement an EU Directive on the VAT treatment of vouchers to ensure that the correct amount of VAT is charged on what the customer pays, irrespective of whether payment is with a voucher or other means of payment.
This measure introduces legislation providing for the VAT treatment of vouchers issued on or after 1 January 2019. It affects only vouchers for which a payment has been made and which will be used to buy something. The measure does not apply to vouchers issued before 1 January 2019, for which existing rules will continue to apply.
Tax and Travel
Car and fuel benefits
The taxable petrol and diesel car benefit is based on the car’s CO2 emissions. It is calculated using the car’s UK list price and applying the ‘appropriate percentage’. The diesel supplement increased to 4% from 6 April 2018. It is removed altogether for diesel cars which are certified to the Real Driving Emissions 2 (RDE2) standard. The car fuel benefit is calculated by applying the same percentages to the fuel benefit charge multiplier, which for 2019/20 is £24,100.
2020/21 sees the introduction of a new range of bands with appropriate percentages ranging from 2%-19% for ultra-low emission vehicles (ULEVs) emitting less than 75 g/km of CO2. Cars with emissions over this amount would see the appropriate percentage set at the lesser of: 20%, plus 1% for each 5 g/km by which emissions exceed 75 g/km; and 37%.
VAT on fuel for private use in cars
Where businesses wish to reclaim the input VAT on fuel which has some degree of private use, they must account for output VAT for which they may use the flat rate valuation charge.
The taxable benefit for the unrestricted private use of vans is £3,430 for 2019/20. There is a further £655 taxable benefit if the employer provides fuel for private travel.
|Van and fuel charge||Van £||Fuel £||Total £|
|Tax (20% taxpayer)||686.00||131.00||817.00|
|Tax (40% taxpayer)||1,372.00||262.00||1,634.00|
|Tax (45% taxpayer)||1,543.50||294.75||1,838.25|
|Employer’s Class 1A NICs||473.34||90.39||563.73|
There is a benefit charge for zero emission vans but there is no fuel benefit for such vans.
Changes to the HMRC business mileage rates are announced from time to time. The fuel only advisory rates below relate to company cars only and apply from 1 September 2018.
|Vehicle||First 10,000 miles||Thereafter|
|Car / Van||45p||25p|
|Car – fuel only advisory rates|
|1400cc or less||12p||10p||7p|
|1401cc to 1600cc||15p||10p||9p|
|1601cc to 2000cc||15p||12p||9p|
|CO2 emissions||Appropriate percentage|
|(g/km)||Petrol %||Diesel %|
|165 and above||37|
The government has reformed the plug-in grant scheme, which offers grants towards the purchase of new qualifying ultra-low emission cars. The scheme will now focus on zero emission models such as pure electric and hydrogen fuel cell cars. By 9 November 2018 at the latest, the grant rate for Category 1 vehicles will reduce from £4,500 to £3,500 and Category 2 and 3 vehicles will no longer be eligible. The government has rolled out new plug-in van and motorcycle grants.
Vehicle Excise Duty (VED) rates
VED bands and rates from 1 April 2019 for cars first registered on or after 1 April 2017
For the first year this is based on CO2 emissions. However, new diesel vehicles registered after 1 April 2018 that do not meet the RDE2 standard will be charged a supplement on their First Year Rate to the effect of moving up by one VED band.
After the first year, all vehicles with zero emissions will be exempt from the standard rate of vehicle tax, and all other petrol or diesel vehicles will pay a standard rate of £145 a year. An additional rate will be added to the vehicle tax for all new vehicles with a list price of over £40,000 (including zero emission vehicles). This additional rate of £320 will be payable each year for five years from the end of the first vehicle licence. After the five year period the standard rate will apply.
The government proposes to change to the new worldwide harmonised light vehicle testing procedure (WLTP) for measuring CO2 emissions.
Standard rates which apply from 1 April 2019 for cars registered from 1 March 2001 to 31 March 2017
|VED Band||CO2 emissions (g/km)||Standard rate|
|A||Up to 100||£0|
|B||101 – 110||£20|
|C||111 – 120||£30|
|D||121 – 130||£125|
|E||131 – 140||£145|
|F||141 – 150||£160|
|G||151 – 165||£200|
|H||166 – 175||£235|
|I||176 – 185||£260|
|J||186 – 200||£300|
|K*||201 – 225||£325|
|L||226 – 255||£555|
|*Includes cars emitting over 225 g/km that were registered before 23 March 2006.|
|CO2 emissions (g/km)||First Year Rate|
|1 – 50||£10|
|51 – 75||£25|
|76 – 90||£110|
|91 – 100||£130|
|101 – 110||£150|
|111 – 130||£170|
|131 – 150||£210|
|151 – 170||£530|
|171 – 190||£855|
|191 – 225||£1,280|
|226 – 255||£1,815|
National Insurance Contributions (NICs)
|2019/20 Class 1 (employed) rates|
|Earnings per week||%||Earnings per week||%|
|Up to £166||0||Up to £166||0|
|£166.01 – £962||12||Over £166||13.8|
|Entitlement to contribution-based benefits for employees retained for earnings between £118.01 and £166 per week.
The employer rate is 0% for employees under 21 and apprentices under 25 on earnings up to £962 per week.
|Class 1A (employers)||On employee taxable benefits||13.8%|
|Class 1B (employers)||On PAYE Settlement Agreements||13.8%|
|Class 2 (self-employed)||Flat rate per week
Small profits threshold
£6,365 per annum
|Class 3 (voluntary)||Flat rate per week||£15.00 per week|
|Class 4 (self-employed)||On profits between £8,632 – £50,000
Excess over £50,000
In a change to the government’s previous plans, Class 2 NICs are no longer set to be abolished from April 2019.
Other measures announced
Voluntary tax returns
Legislation will be introduced in Finance Bill 2018/19 with retrospective and prospective effect to put HMRC’s longstanding practice of accepting voluntary tax returns onto a statutory basis.
These voluntary returns will be put on an equal footing with returns delivered under a formal notice to file and apply to income tax, capital gains tax and corporation tax returns.
Business rates relief
Retail properties with a rateable value below £51,000 will see their business rates bills cut by a third for two years from April 2019, subject to state aid limits.
Gift Aid Small Donations Scheme (GASDS)
Currently the GASDS only applies to donations of £20 or less made by individuals in cash or by contactless payment. This limit will increase to £30. Parliamentary timetable permitting, this will become effective from 6 April 2019.
Making Tax Digital
The government is phasing in its landmark Making Tax Digital (MTD) initiative, which will see the introduction of a fullyThe government is phasing in its landmark Making Tax Digital (MTD) initiative, which will see the introduction of a fully digital tax system, with businesses and individuals being required to register, file, pay and update their information via a secure online tax account.
From 1 April 2019, businesses with a turnover above the VAT threshold (currently £85,000) must keep digital records for VAT purposes and provide their VAT return information to HMRC using MTD ‘functional compatible software’. The government recently announced that it has made the decision to delay the mandation of MTD for VAT until 1 October 2019 for a small minority of VAT-registered businesses with ‘more complex requirements’.
Keeping digital records and making quarterly updates will not be mandatory for taxes other than VAT before April 2020, although businesses below the VAT threshold which have voluntarily registered for VAT can opt to join the scheme.
‘Functional compatible software’ is defined as ‘a software program or set of compatible software programs which can connect to HMRC systems via an Application Programming Interface (API)’. The software must be capable of keeping records in digital form; preserving records in digital form for up to six years; creating a VAT return from the records held; providing HMRC with VAT data on a voluntary basis; and receiving information from HMRC via the API platform.
Firms are permitted to keep digital records in a range of compatible software programs. The use of spreadsheets is also permitted, provided that this is in combination with MTD software. However, HMRC has outlined that manual data transfer is not allowed: copying by hand or manual transposition of data into software is not permitted, and cut and paste will not be acceptable in the long-term.
HMRC will not be providing taxpayers with MTD software. Currently, it is working alongside software developers in order to ensure products are on the market by the MTD start date. HMRC will provide a full list of MTD-compatible products as soon as possible: an initial list can be found on the gov.uk website.
|1||New Advisory Fuel Rates (AFR) for company car users apply from today.|
|19||PAYE, Student loan and CIS deductions are due for the month to 5 June 2019.|
|30||End of CT61 quarterly period.|
|2||Deadline for submitting P46(Car) for employees whose car/fuel benefits changed during the quarter to 5 July 2019.|
|19||PAYE, Student loan and CIS deductions are due for the month to 5 August 2019.|
|1||New Advisory Fuel Rates (AFR) for company car users apply from today.|
|19||PAYE, Student loan and CIS deductions are due for the month to 5 September 2019.|
|30||End of CT61 quarterly period.|
|2||Deadline for submitting P46(Car) for employees whose car/fuel benefits changed during the quarter to 5 October 2019.|
|19||PAYE, Student loan and CIS deductions are due for the month to 5 November 2019.|
|2||Deadline for submitting P46(Car) for employees whose car/fuel benefits changed during the quarter to 5 January 2020.|
|19||PAYE, Student loan and CIS deductions are due for the month to 5 February 2020.|