Predicting this year’s Budget
6th June 2019
Our Tax Partner Ian Kelly discusses what might attract the Chancellor’s interest over the next few months, and advises on pre-emptive actions to consider.
Brexit. It’s safe to say, this word won’t disappear any time soon. Had the UK left the EU as intended in March then we may have had a ‘post-Brexit Budget’ by now, and of course one might follow quickly after the next scheduled leave date of 31 October, although that date is very close to the 2019 Budget date of 29 October.
Although it’s early to predict what might feature in this year’s Budget, here are some things that might attract the Chancellor’s interest over the next few months.
Annual Investment Allowance
This has a ‘temporary’ £1 million limit up to 31 December 2020. It might be worth considering accelerating any planned spend.
Entrepreneurs’ Relief (ER)
The 2018 Budget tightened this relief’s conditions and made them effective from 6 April 2019. Many think the 10% Capital Gains Tax rate is fair but the £10 million threshold for lifetime gains too generous. If planning to use ER, look to have the sale process underway before Budget Day.
Pension Tax Relief
The abolition of higher rate tax relief has become a perennial tip for the chop and yet it still survives. This could be the year it goes, or a National Insurance (NI) liability night be introduced on employer contributions. It is sound advice to pay any lump sum premiums ahead of the Budget.
Capital Gains Tax on the sale of Private Residences
We have already seen changes (from 6 April 2020) to the exemption for the final period of ownership, which is to reduce from 18 months to nine (it’s not that long ago it was 36 months). There has also been a clampdown on lettings relief, so there might be further tinkering. Should sales already planned for before 5 April 2020 be accelerated?
This has reduced from £5,000 to £2,000 and was expected to bite the dust last year but survived. This might see changes this time around and/or there might be a NI charge on close company dividends. We would predict it’s time for an earlier than expected review of dividend policy.
Reform of self employed National Insurance Contributions
This was unceremoniously dumped… might it be resurrected? Is it worth looking at the creation or enlarging of partnerships, or will incorporation increase in popularity?
We are thinking ahead on your behalf. Talk to the tax team to see how we could help.