French Duncan | 14 March 2019
The Chancellor, Philip Hammond, previously stated the Spring Update is now the reserve of economic policy with any key tax measures being reserved for the Budget. With the prospect of Brexit looming many economic announcements were Brexit dependent, with headline announcements including:
- In the event of a no-deal Brexit, an increase in tariffs to EU countries, including car imports, and a reduction on tariffs to non-EU countries. Overall this should equate to an increase in zero-tariff imports from 80% to 87%.
- In the event that the UK leaves the EU with a Brexit deal the Chancellor has pledged a £26.6bn “deal dividend” to cut taxes and spend on public services.
- The UK growth forecast is set at 1.2% this year, 1.4% next year and 1.6% in each of the final three years.
- Borrowing in 2019 will be just 1.1% of GDP which is £3bn lower than forecast at the Autumn Budget.
Many of the key tax announcements from the Autumn Budget will come into effect in the immediate future, including:
- For UK tax payers the personal allowance will be raised to £12,500 from 6 April 2019, one year earlier than originally planned.
- For non-Scottish UK higher rate threshold will also rise to £50,000 from 6 April 2019, also a year earlier than originally planned, and will remain at the same level in 2020/21. The basic rate and higher rate income tax rates remain at 20% and 40% respectively.
- For Scottish tax payers, tax bands and income tax rates from 6 April 2019 are as follows:
||Scottish Basic Rate
- The lifetime allowance for pension savings will increase to £1,055,000 for 2019/20 in line with CPI.
- For entrepreneurs’ relief, the minimum period throughout which the qualifying conditions for relief must be met will be extended from 12 months to 24 months from 6 April 2019. Further anti-avoidance measures will apply from 29 October 2018.
- The VAT registration threshold is to be maintained at the current level of £85,000 until April 2022.
- The annual investment allowance (AIA) increased to £1 million for all qualifying investments in plant and machinery made on or after 1 January 2019 until 31 December 2020. Additionally a new 2% capital allowance for commercial and industrial buildings was introduced
Measures that were announced in the Autumn Budget that will apply from April 2020 include:
- Companies will be subject to a 50% limit on the proportion of annual capital gains that can be relieved by brought-forward capital losses. Companies will have unrestricted use of up to £5 million capital or income losses each year.
- Capital gains tax lettings relief will only apply where the owner of the property is in shared occupancy with the tenant. The final period exemption will also be generally reduced from 18 months to nine months. A consultation period will follow.
- The amount of payable research and development (R&D) tax credits 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.
- When a business enters insolvency, HMRC will be a preferred creditor for taxes collected by the business for the government such as VAT, PAYE income tax, employee NICs, and construction industry scheme deductions – but not such taxes as corporation tax and employer NICs.
- Large social media platforms, search engines and online marketplaces will be pay a 2% tax on the revenues they earn which are linked to UK users.
Please click on the images below to download our Spring Statement Summary and 2019-2020 Tax Rates Card. If you have any queries or concerns about how you may be affected please get in touch.