Philip Hammond delivered a feel-good Budget yesterday, throwing in a trademark dry joke every 5 minutes or so. For our clients, the Budget was a good one primarily because the off-payroll working reform was not pushed through, being shifted instead to ’consultation’. Overall however, there was not a great deal to report. There was a freeze on fuel duty, and a stamp duty tax break for first home buyers. Little bits and pieces, but Mr Hammond does not have a great deal of money at the moment and although he did promise that he would balance the books by the middle of the next decade, the OBR (Office for Budget Responsibility) labelled the target as ’challenging’.
It is of course hard to hide the grim deterioration in the economy. The UK has suffered almost 10 years of productivity stagnation and GDP growth rates are now forecast to barely rise above 1.5% over the next 5 years. The squeeze on household finances also looks set to continue.
Having said all that, here are the main points we picked up that we thought may interest you;
(1) Off-payroll working reform: extension to the private sector. The government will consult in 2018 on how to tackle non-compliance with the intermediaries legislation (IR35) in the private sector. In April 2017 this was rolled out to the public sector in a messy and inconsistent way. It affected a number of our clients and if you work through your own Ltd Company, this will be the biggest issue to keep an eye on over the coming couple of years.
(2) Tackling disguised remuneration. This has never affected any of our clients while they have been using our service, but if you have ever heard of schemes where you receive an ’income’ in the form of non-repayable loans, and pay very little tax, this is the target. Numerous changes have been enacted over the past few years and more are to come. It’s bad news if you ever used a scheme where you were ’paid’ as a contractor involving some form of loan.
(3) Reduction of VAT registration threshold did not happen. You may have read about this in the lead up to the Budget. Some commenters suggested the compulsory VAT threshold would be lowered to £20,000 but this has been set to stay at £85,000 for the next 2 years.
(4) The Personal Allowance and Basic Rate limits increase to £11,850 and £46,350 respectively, just small increases here.
(5) Stamp Duty Land Tax relief for first-time buyers. First time buyers paying £300,000 or less for a residential property will pay no Stamp Duty Land Tax (SDLT). And first time buyers paying between £300,000 and £500,000 will pay SDLT at 5% on the amount of the purchase price in excess of £300,000, a reduction of £5,000 compared to the amount of SDLT they would have previously paid.
(6) Taxing non-residents’ gains. Previously, non-residents paid only UK tax on gains from UK residential property. From April 2019 this will be extended to all forms of ’immoveable property’ including offices, factories, warehouses, shops, hotels, leisure facilities and agricultural land located in the UK.
(7) Extending time limits for offshore non-compliance. Maybe in response to the Paradise Papers, the government will extend the time limits for assessing all offshore cases to at least 12 years where non-compliant behaviour is involved, with a consultation on this in spring 2018.
(8) Making Tax Digital. Finally a few months ago we received confirmation of Making Tax Digital timelines, which were confirmed in the Budget. Making Tax Digital is a new format of company and tax reporting that will be required on a more regular basis. The timelines keep getting extended, and we now know that; (a) only businesses with a turnover above the VAT threshold (currently £85,000) will have to keep digital records and only for VAT purposes from 2019, and; (b) businesses will not be asked to keep digital records, or to update HMRC quarterly for other taxes, until at least 2020.
Well, that’s it for our Budget update. We hope it’s been useful for you and as always, if you have any queries please feel free to get in touch.