Budget Update October 2018

National Living Wage

From April 2019 this will increase from 7.83 an hour to £8.21

For Individuals

The Personal Allowance will increase to £12,500 and the basic rate limit to £37,500 brining the total earnings before you start paying tax at 40% to £50,000. This is effective from April 2019, a year earlier than promised in the government’s manifesto

For Property Owners

The lettings relief, which allowed £40,000 of tax free capital gain if you are letting a property which was previously your principal private residence, is being withdrawn from April 2020 unless the owner and tenants are in shared occupation. The period in which you are deemed to be living in the property before the sale will be reduced from 18 to 9 months.

For Businesses

The Annual allowance (the amount of investment in plant and machinery you can claim against tax in the year of investment) is increased from 200,000 to £1m between 1 January 2019 and 31 December 2020. A new Structures and Buildings Allowance has been created, effective immediately: New non-residential structures and buildings will be eligible for 2% capital allowance.

The rules to qualify for Entrepreneur’s relief (10% tax rate on capital gains if you sell shares in your company) have been tightened:

  • Effective immediately, the claimant must now have at least a 5% interest in the voting rights, distributable profits and assets available for distribution on winding up
  • For disposals after 6 April, the minimum period for qualifying conditions to be met increases from one year to 2 years.

Research and Development for Small Businesses

From April 2010 the amount of R&D relief that an SME may claim is capped at 3 times its PAYE and NICs liability for the year.

VAT

There are no changes, but change is expected and further announcements will be made once Brexit is agreed.

Charities

The limit under the Gift Aid Small Donations Scheme, which applies to small collections where it is impractical to obtain a Gift Aid declaration, is increased to £30.00.