Scrutton Bland Spring Statement 2019

Other key changes for 2019/20

Considering capital allowances Plant and machinery

A number of other key changes are coming into effect during 2019, which may have an impact on your business and personal finances. Employer-provided cars The scale of charges for working out the taxable benefit for an employee who has use of an employer-provided car are normally announced well in advance. Most cars are taxed by reference to bands of CO 2 emissions, multiplied by the original list price of the vehicle. The maximum charge is capped at 37% of the list price of the car. For 2018/19 there was generally a 2% increase in the percentage applied by each band. For 2019/20 the rates will increase by a further 3%. Increase in compulsory employer pension contributions The pensions auto-enrolment legislation currently requires employers to contribute at least 2% on the qualifying pensionable earnings for eligible jobholders. From 6 April 2019 this will rise to 3%. Rising Residence Nil-Rate Band The inheritance tax Residence Nil-Rate Band (RNRB), introduced in April 2017, will rise from £125,000 in 2018/19 to £150,000 for the 2019/20 tax year. The RNRB is designed to enable a ‘family home’ to be passed wholly or partially tax-free on death to direct descendants such as children or grandchildren. It will increase to £175,000 in 2020/21. Thereafter it will rise in line with the Consumer Price Index. Gift Aid – donor benefits The donor benefits rules that apply to charities who claim Gift Aid tax relief on donations are simplified from 6 April 2019. The benefit threshold for the first £100 of the donation remains at 25% of that amount. For gifts exceeding £100, charities can offer benefits up to the sum of £25 and 5% of the amount of the donation that exceeds £100. The total value of the benefit that a donor can receive remains at £2,500. The new limits replace the current mix of monetary and percentage thresholds that charities have to consider when determining the value of benefit they can give to their donors without losing the entitlement to claim Gift Aid tax relief on the donations given to them. Gift Aid Small Donations Scheme The Gift Aid Small Donations Scheme (GASDS) applies to small charitable donations where it is impractical to obtain a Gift Aid declaration. The GASDS currently applies to donations of £20 or less made by individuals in cash or contactless payments. The limit increases to £30 from 6 April 2019.

In the 2018 Autumn Budget, the government announced an increase in the Annual Investment Allowance (AIA) for two years, from £200,000 to £1 million, in relation to qualifying expenditure incurred from 1 January 2019. Special rules apply to accounting periods which straddle this date. Other changes made to plant and machinery capital allowances include: • a reduction in the rate of writing down allowance (WDA) on the special rate pool of plant and machinery (including long-life assets, thermal insulation, integral features and expenditure on cars with CO 2 emissions of more than 110 g/km) from 8% to 6% from April 2019. Special rules apply to accounting periods which straddle this date • the end of the 100% first year allowance and first year tax credits for products on the Energy Technology List and Water Technology List from April 2020. The Structures and Buildings Allowance A new capital allowance, termed the Structures and Buildings Allowance (SBA), gives relief for expenditure on certain structures and buildings. The allowance is available for new structures and buildings intended for commercial use, and the improvement of existing structures and buildings, including the cost of converting or renovating existing premises to qualifying use. Relief is limited to the original cost of construction or renovation, and given across a fixed 50-year period, at an annual flat rate of 2%, regardless of changes in ownership. Only certain expenditure will qualify. The structures or buildings must be brought into use for qualifying activities. These include trades, professions or vocations, and certain UK or overseas properties businesses – essentially, commercial property lettings. Relief will be given on eligible construction costs incurred on or after 29 October 2018. Where a contract for the physical construction work is entered into before this date, relief is not available. Since the ending of the Industrial and Agricultural Buildings Allowances, no relief has been available for most structures and buildings. The new allowance addresses the gap, and is intended to encourage investment in construction for commercial activity. The detailed rules are still subject to consultation.

What they said...

This publication was prepared immediately following the Chancellor’s Spring Statement based on official press releases and supporting documentation. The publication is for guidance only, and professional advice should be obtained before acting on any information contained herein. No responsibility can be accepted by the publishers or the distributors for any loss occasioned to any person as a result of action taken or refrained from in consequence of the contents of this publication.

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