What 2018 Bud­get means for busi­ness

Stirling Observer - - STIRLINGSHIRE REMEMBERS - Tax and Busi­ness Ad­vi­sory Ser­vices Di­rec­tor

The fi­nal Bud­get be­fore the UK leaves the EU has been an­nounced by UK Chan­cel­lor Philip Ham­mond. There were a num­ber of mea­sures de­tailed in the Bud­get which will af­fect busi­nesses and the per­sonal tax of busi­ness own­ers in Scot­land.

This in­cludes the tem­po­rary in­crease in the An­nual In­vest­ment Al­lowance thresh­old from £200,000 per an­num to £1 mil­lion from 1 Jan­uary 2019 to 31 De­cem­ber 2020. This has been in­tro­duced to help stim­u­late busi­ness in­vest­ment in cap­i­tal ex­pen­di­ture. Cap­i­tal al­lowances give tax re­lief against trad­ing prof­its for ex­pen­di­ture on cap­i­tal as­sets. This means that a busi­ness can spend up to £1 mil­lion on qual­i­fy­ing ex­pen­di­ture and get 100% tax re­lief in the year of the ex­pen­di­ture. The tim­ing of any in­vest­ment de­ci­sions should be con­sid­ered to en­sure the ex­pen­di­ture can ben­e­fit from the full £1 mil­lion al­lowance.

An­other wel­come mea­sure is the in­tro­duc­tion of new cap­i­tal al­lowances for non-res­i­den­tial struc­tures and build­ings. This new Struc­tures and Build­ings Al­lowance (SBA) will give tax re­lief at two per cent per an­num on the ex­pen­di­ture over 50 years on qual­i­fy­ing costs for new com­mer­cial build­ings which do not in­clude res­i­den­tial build­ings. The SBA will also ap­ply to agri­cul­tural build­ings. There was much talk pre-Bud­get around the fu­ture of En­trepreneurs’ Re­lief (ER). This re­lief ap­plies a 10% rate of cap­i­tal gains tax on the gain on the sale of a busi­ness or shares in a per­sonal com­pany by an in­di­vid­ual. The changes an­nounced in the Bud­get tighten the rules for ER such that the in­di­vid­ual must be en­ti­tled to five per cent of the or­di­nary share cap­i­tal, five per cent of the vot­ing rights, five per cent of the dis­tributable prof­its and five per cent of the as­sets avail­able for dis­tri­bu­tion to qual­ify for the re­lief. In ad­di­tion, with ef­fect from April 6, 2019, the min­i­mum qual­i­fy­ing hold­ing pe­riod is in­creased from 12 to 24 months. The rules have been changed to en­sure that the re­lief is only be­ing claimed by in­di­vid­u­als with a real stake in the busi­ness. The Chan­cel­lor de­tailed that avail­abil­ity of ER sup­ports en­ter­prise in the UK and there­fore it ap­pears he is minded to tweak the con­di­tions rather than abol­ish the re­lief al­to­gether.

The set­ting of in­come tax rates was de­volved to the Scot­tish Govern­ment from 2016/17 on­wards and there­fore the per­sonal tax­a­tion of the in­di­vid­ual Scot­tish busi­ness owner is un­clear fol­low­ing the Bud­get. The an­nounce­ment that the 40 per cent tax rate will only to ap­ply to in­di­vid­u­als on salaries over £50,000 in 2019/20 tax year will not ap­ply in Scot­land. As a re­sult of the changes to the higher rate band un­veiled in the UK Bud­get, mid­dle-earn­ers in Scot­land face a grow­ing tax bur­den com­pared with their coun­ter­parts else­where in the UK. The Scot­tish Fi­nance Sec­re­tary Derek Mackay pub­lishes his draft bud­get for Scot­land on De­cem­ber 12. It re­mains to be seen as to whether the in­come tax rates and thresh­olds in Scot­land will be ad­justed fol­low­ing the UK Bud­get changes an­nounced.

Over­all the Bud­get ap­pears to have been largely pos­i­tive for busi­ness with ad­di­tional tax re­lief for cap­i­tal ex­pen­di­ture, how­ever as al­ways the devil may well be in the de­tail.

•John Gold is a Tax and Busi­ness Ad­vi­sory Ser­vices Di­rec­tor at Camp­bell Dal­las.

To dis­cuss any Bud­get im­pli­ca­tions for you and your busi­ness, please con­tact John. Gold@camp­bell­dal­las.co.uk or call 01786 460 030.

Over­all the Bud­get ap­pears to have been largely pos­i­tive for busi­ness... how­ever the devil may well be in the de­tail

New mea­sures Chan­cel­lor of the Ex­che­quer’s Bud­get has im­pli­ca­tions for busi­nesses and their own­ers

Newspapers in English

Newspapers from UK

© PressReader. All rights reserved.