Income Tax and Capital Gains Tax (CGT) Changes
From 6 April 2018 the personal allowances and thresholds will change (further details can be found here).
Also from Wednesday (29th November) the Marriage Allowance rules (which allow individuals to transfer 10% of their Personal Allowance to their basic rate spouse or civil partner), have been extended to allow claims to be made in respect of a deceased spouse or civil partner and the claim may be backdated for up to 4 years
On CGT the only change of any significance was the introduction of a 30 day window for paying CGT on the sale of residential property has been deferred until April 2020.
Cars and Vans
Bad news for those who have cars and vans provided by their employer for private use – from 6 April 2018 an increase in the taxable cash equivalents amounts (the car multiplier from £22,600 to £23,400, van benefit from £3,230 to £3,230 to £3,350 and van fuel benefit from £610 to £633) will result in higher tax charges.
The boot continues to be aimed at diesel company car drivers. In addition, from 6 April the current supplement used to calculate the taxable company car and car fuel benefit for diesel cars will increase from 3% to 4% for vehicles failing to meet the Real Driving Emissions 2 (RDE2) standard (not the VW one!)
Inheritance Tax (IHT)
Revenues from IHT year on year keep rising due to the fact that that the nil rate band has not increased since 6 April 2009, despite the rising value of assets. Nevertheless, it had been thought that there would have been an attack on some of the reliefs available to reduce the IHT payable (mainly Agricultural Property Relief and Business Property Relief). Whilst no changes were announced in the Budget, this may be an area that is revisited in future and/or where claims for relief may be the subject of increased HMRC challenge.
Employment – Subsistence Payments
Employers will no longer be required to check receipts when making payments to employees using the benchmark scale rates for subsistence whilst traveling for work purposes. This will benefit both employers and employees but employers will still be required to keep evidence that the travel was in fact for work purposes and would be recommended to implement spot checks to ensure that costs were actually incurred.
Intermediaries Legislation (IR35)
One of HMRC's favourite targets is back on the radar! Individuals contracting via personal service companies and those engaging with such companies will need to consider the outcome of a proposed consultation into the operation of IR35 in the private sector. It may follow the changes already introduced for the public sector, which has moved the decision on whether or not the IR35 rules apply from the contractor to the body receiving those services, as well as a change in the why in which the tax liability is calculated.
Foreign Service Relief
As had been confirmed earlier this year, from 6 April 2018 individuals who are resident in the UK in the year in which their employment is terminated will be fully liable to UK tax on any payment received, even if some of the service was undertaken overseas. This will be an unwelcome change for individuals with a history of working overseas for their employer and could lead to some sizeable amounts of extra tax becoming payable. We plan to issue a separate briefing on this to explain in more detail the impact of this change.
Following previous consultation, it was announced that there are to be a number of changes that will impact how some partnerships report profits shares, including stating that profits will now need to be allocated between partners in the same ratio as the commercial profits. This is likely to mostly affect family partnerships. Again we plan to release a separate briefing on this subject.
Good news in that the VAT threshold has been frozen for two years at £85k. It had been thought that this may have lowered substantially which would have resulted in many more self-employed individuals and small businesses being required to register for VAT.
Stamp Duty Land Tax (SDLT)
As mentioned above, first time buyers will not have to pay SDLT on the purchase of properties up to £300k.
In addition, the reduction in the time to file and pay any SDLT (from 30 days to 14 days) has been postponed and will now only apply to transactions on or after 1 March 2019.
Neither of these provisions apply to property transactions in Scotland.
This continues to be an area of focus for HMRC and the government will consult to extend the current time limits to 12 years to assess liabilities irrespective of behaviour. Currently the time limits are 4, 6 and 20 years depending on whether or not the individual made a genuine mistake, failed to take reasonable care or acted deliberately to evade tax.
Making Tax Digital (MTD)
It had been announced earlier this year that the introduction of MTD was to be delayed and this Budget confirmed that the project is being kicked further into the long grass and that it would not be introduced until April 2020 at the earliest! Hard to think that this time last year, HMRC were still insisting that the start date would be 6 April next year.
Simplifying Late Submission and Late Payment Sanctions
The response to a consultation on this topic is due to be released on 1 December and the aim is to put in place a model which is based around proportionality, fairness, consistency and threat. As a result, the Government is intending on moving forward with a points based penalty proposal, although the enforcement of these new sanctions may not be for a number of years – perhaps to be aligned with the eventual introduction of MTD?
Certificates of Tax Deposit
The scheme for obtaining a certificate of tax deposit has not been closed and existing certificates will continue to be honoured for 6 years. Such certificates were useful in reducing interest charges where the extent of a tax liability had not yet been agreed by HMRC and the taxpayer. Now the only way to mitigate any interest charges will be for the taxpayer to make a payment to HMRC and then apply to have it repaid if the liability is successfully challenged by the taxpayer.