In his last Budget before Brexit, Philip Hammond gave away with one hand but did take back with the other!
The good news is that he has accelerated the increase in personal allowances and the threshold for higher rate tax meaning that from next April ie 6 April 2019, the personal allowance will rise to £12,500 and the basic rate tax band will extend to £50,000. The current levels of dividend allowance and personal savings allowance all remained unchanged, although the transferable married allowance available to married couples/civil partners has increased to £1,250, meaning a tax saving of £250 can be passed over to the taxpaying spouse.
The main areas of concern for owners of property is that main residence relief is being severely curtailed from 6 April 2020. If the owner has had to move away from the property for any reason but the property had been occupied as a main residence, then the last 18 months of ownership were counted towards periods of occupation as a main residence. This period of “deemed” occupation has now been halved to only 9 months – meaning that over the last few years this “relief” has been slashed down from 36 months to just 9 months!
Furthermore, if a property that had previously been a main residence, was let out, then additional relief for capital gains tax was available in the form of “Lettings Relief” up to a maximum of £40,000 but this is to be withdrawn from 6 April 2020. The Chancellor stated that Lettings Relief would still be available in the event the house was in “shared occupancy” ie landlord and tenant living in that property together but this seems a somewhat disingenuous statement because if the landlord- proprietor was living there, he/she would get main residence relief anyway!
There was no movement from the capital gains rates on property of 18% and 28%.
The government will publish a consultation in January 2019 on an SDLT surcharge of 1% for non-residents buying residential property in England and Northern Ireland.
Contractors working in the private sector are being brought within the same IR35 changes from April 2020 that were brought in for public sector contracting two years ago. The IR35 rules will not apply if the engaging company is regarded as “small”. The definition of “small” is expected to be companies with fewer than 50 employees but this still has to be confirmed. A further consultation period is expected before the draft Finance Bill is published in Summer 2019.