The big tax news for business doesn’t affect small businesses; it a new 2% digital tax on the value generated by UK users and applies to businesses with revenues over £500m. Here are some of the key highlights on this year’s autumn budget in relation to small businesses.
Personal allowance increase
Although not a business relief, this does help business owners because of the increase to £12,500 and been brought forward one year.
IR35 rules in the private sector
Medium and large businesses will be responsible for assessing the status of an engagement, small businesses will not. At this stage, we do not know how a small business will be defined. To assist businesses, the tax office has shared a tool called the Check Employment Status for Tax (CEST).
Relief worth £900m will be implemented immediately for small retailers with a rateable value of £51,000 or less. Rates will be reduced by a third.
Research and Development Tax Credits
From April 2020 the amount a loss-making company can claim is limited to three times its total PAYE contributions.
Annual Investment Allowance
The amount of qualifying investment expenditure in plant and machinery from 1st January 2019 to 31st December 2020 will increase from £200,000 to £1m.
The special rate for capital allowances on qualifying plant and machinery will be reduced from 8% to 6% (from 6 April 2019).
Company capital losses
From 1 April 2020, the proportion of annual capital gains over a £5m allowance that can be relieved by brought-forward capital losses will be limited to 50%.
Intangible fixed assets
There will be a relief for the cost of goodwill in acquiring businesses with eligible intellectual property from April 2019.
Employment Allowance (EA)
From April 2020, only employers with an employer National Insurance contributions (NICs) bill below £100,000 in their previous tax year will be eligible for EA.
For disposals, after 6 April 2019, the minimum period throughout which the qualifying conditions for relief must be met will be extended from 12 months to 24 months. To claim this relief from 29 October 2018, shareholders must also be entitled to at least 5% of the distributable profits and net assets of a company on a winding up.
We have updated our tax planning process to incorporate these changes.
Image from Flickr by Emerandsam.