The Autumn Budget 2018 Reaction: Business Taxes
In this blog we set out how the 2018 Autumn Budget affects businesses
It has been announced that the Annual Investment Allowance (AIA) limit will be temporarily increased to £1million from £200,000 for all qualifying investment in plant and machinery made on or after 1 January 2019 until 31 December 2020. Apportionment and transitional rules will apply to businesses that do not have a 31 December year end.
The capital allowances available for qualifying plant and machinery within the ‘special rate pool’ will be reduced to 6% from 8% from April 2019. Special rate expenditure includes expenditure on long-life assets, thermal insulation, integral features and cars with CO2 emissions of more than 110 grams per kilometre. This does not affect the writing down allowances available within the ‘main pool’ which currently stands at 18%.
A new Structures and Buildings Allowance will be introduced where by new non-residential structures and buildings will be eligible for a 2% annual capital allowance where all the contracts for the physical construction works are entered into on or after 29 October 2018.
From April 2020 it is expected that first year allowances and first year tax credits which are currently available on energy efficient assets such as boilers and lighting as listed in the energy technology lists will be abolished.
The VAT threshold for registration has been fixed at £85,000 p.a. for two years from 1 April 2020 as with the VAT deregistration threshold which will continue to be £83,000 p.a.
There has been no change to the planned corporation tax rate reduction which is still expected to fall to 17% from April 2020.
Research and Development (R&D)
From April 2020 the amount of payable R&D tax credit 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.
From April 2020 the £3,000 Employment Allowance will only be available to employers who have an Employer National Insurance contributions (NICs) bill below £100,000 in their previous tax year. The Employment Allowance will continue to be £3,000 for those qualifying companies.
Reduction in Business Tax Rates on the High Street
In a bid to provide upfront support for shops, pubs, restaurants and cafés on the High Street, business rates will be cut by one-third for retail properties with a rateable value below £51,000 for 2 years from April 2019.
Intangible fixed assets regime
The Government will seek to introduce targeted relief for the cost of goodwill (the amount paid for a business that exceeds the fair value of its individual assets and liabilities) in the acquisition of businesses with eligible intellectual property from April 2019.
With effect from 7 November 2018, the Government will reform the de-grouping charge rules which brings into charge an intangible asset when a parent company sells a subsidiary company which owns an intangible asset. These changes should minimise the charge to tax and move the rules in line with those relating to tangible assets.