The UK budget proposals for 2019/20 were announced on 29 October 2018. Proposed measures include the following:
Digital services tax
The digital services tax will apply to large tech companies with global revenues of more than GBP 500 million per year and will only apply to companies that are profitable. The tax is to be charged at 2% on the UK revenues of companies providing digital services such as search engines, social media platforms and online marketplaces. The tax is to take effect from 1 April 2020 and there will be consultation on the details of the measure. The legislation will be drafted to ensure that it does not affect tech start-ups in the UK.
Structures and Buildings Allowance
A new Structures and Buildings Allowance (SBA) is to be available for new construction expenditure on non-residential buildings and structures. The allowance is 2% per year for 50 years. The SBA will be available on the acquisition of new properties from developers that meet the required conditions, excluding any element of the price relating to land.
Apprenticeship levy
A package of reforms was announced to strengthen the part played by employers in the apprenticeship programme. The government provide up to GBP 450 million to allow employers that pay the levy to transfer up to 25% of their funds to pay for apprenticeship training in their supply chains. There will also be up to GBP 240 million available to halve the co-investment rate for apprenticeship training from 10% to 5%. The Institute for Apprenticeships and National Apprenticeship Service will be given GBP 5 million in 2019/20 to identify gaps in the trainer provider market and to increase the number of employer-designed apprenticeship standards available to employers.
Employment allowance
The employment allowance allows a GBP 3,000 reduction in the bill for national insurance contributions for businesses and charities. The employment allowance will in future be focused on smaller businesses. With effect from April 2020 access to the allowance will be restricted to employers with an annual NIC bill below GBP 100,000. The government considers that 99% of micro-businesses and 93% of small businesses will continue to be eligible for the allowance.
Annual investment allowance
From 1 January 2019 for two years the maximum amount of the Annual Investment Allowance (AIA) available to businesses investing in plant and machinery will temporarily increase from GBP 200,000 to GBP 1 million. From 1 January 2021 the maximum AIA will again be GBP 200,000.
Entrepreneurs’ relief
The entrepreneurs’ relief provides for a reduced 10% capital gains tax rate for individuals selling their business or shares in their employer. Currently individuals must have held their interest for at least 12 months before the disposal. From 6 April 2019 the holding period will be extended to 24 months.
National Insurance Contributions
The government has confirmed its previous announcement that Class 2 National Insurance Contributions will not be abolished during the current Parliament.
Stamp duty land tax
In January 2019 a consultation will be published on the introduction of a stamp duty land tax (SDLT) surcharge of 1% for non-residents buying residential property in England and Northern Ireland.
Personal allowances
From April 2019 the income tax personal allowance will be GBP 12,500 and the basic rate band will be GBP 37,500, resulting in a higher rate threshold of £50,000 for 2019/20.
The annual exemption from capital gains tax for individuals will be GBP 12,000 from April 2019.
Excise duty
Fuel duty is to be frozen again. Beer, cider and spirits duties are also to be frozen. Duty on wine will rise in line with inflation. Tobacco duty will rise by inflation plus 2%.
