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Budget 2018

Today Philip Hammond announced that the “era of austerity is finally coming to an end but discipline will remain”. There was welcome news for many businesses in his second Autumn Budget.

We have highlighted below some of the main headlines.

Personal tax
The Conservatives’ manifesto pledge to increase personal allowances to £12,500 and the higher rate threshold to £50,000 will be implemented from April 2019, which is one year earlier than proposed.

Entrepreneurs’ relief
Despite the pre-budget speculation, entrepreneurs’ relief will continue. However, the qualifying ownership period has been extended from 12 months to two years. Transitional rules will apply where the claimant’s business ceased before 30 October 2018.

Annual investment allowance
Businesses will now enjoy a higher AIA of £1,000,000 for the two years beginning January 2019, this should encourage capital investment.

Research and development
Refunds arising from research and development claims will be restricted to the PAYE paid by the company. This will restrict the benefit of R&D claims by companies that do not have employees.

IR35
The new IR35 rules will not be introduced to the private sector until April 2020 and it will only affect large and medium sized businesses. This will bring the private sector into line with the current public sectors rules.

Property tax
The main residence relief will be restricted. The final qualifying period of ownership will be reduced to nine months.

SDLT
Extension of SDLT exemption for joint first time buyers acquiring a property of up to £500,000. This measure is retrospective and first time buyers in this position may be able to claim a refund.

VAT
The VAT registration threshold will be maintained until 2022.

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