With potential political upheaval ahead, it is important that the Budget that Phillip Hammond delivered was suitable for the support of the DUP. We can only wait to see if that is the case. Mr Hammond delivered a number of initiatives that will affect the clients that Lambert Chapman LLP represent. These include the following;
-Increasing the time limit from 12 to 24 months to qualify for Entrepreneurs Relief. This is a much used relief by many of our clients and so this extension will present issues for some. In the majority of cases ER claims represent retirement from the business and so this will make no difference at all but for some a time extension prior to the sale might be needed. The aim of this change is to restrict the use of capital gains to “true” rather what HM Revenue & Customs consider to be contrived cases. Whilst I am all for a reduction in contrived cases, careful planning might be needed to reward long standing key employees in retirement or sale situations which may be now more difficult.
–Research & Development claims may be restricted to three times the PAYE paid for loss making and start up companies which could have a serious effect on businesses with a handful of employees. At times we see claims that, whilst beneficial to the business, are eyebrow raising and it seems that HM Revenue & Customs might be in agreement. This will be dealt with by a consultation and the amended rules commencing in April 2020. If you have R&D claims ongoing or upcoming act now to avoid potential disappointment.
-The Annual Investment Allowance will be extended from its current £200,000 to £1m until March 2020. Previous Chancellors have adopted such a tactic to encourage investment into plant and machinery in an effort to encourage productivity and additional capacity. Often this has been when the economy has been suffering to help aid recovery. With the current economic uncertainty due to the dreaded “B” word this can be viewed as a welcome treat for many SME business owners.
–Business Rate Relief is being introduced for SME’s to enable these businesses to gain a stronger foothold on the High Street. This might be a welcome addition for many but for Market Towns like Braintree, there needs to be a balance of retail options to add the attraction for the shopper to visit in the first instance and this is often what is lacking. The businesses that underpin the local retail centre are the larger ones and their rates may be unaffected. It is these businesses that we read about more often than not negotiating with landlords in an effort to reduce their rent.
-Our drift towards the online High Street appears difficult to deter but the introduction of the technology/digital tax may make us think twice as prices may have to increase to cover the additional tax bill that will now arise. In the US we understand that Amazon may be returning to the High Street to cover those customers who wish to handle product before purchasing. Will this extend to the UK? We can only hope!
-The personal allowance will be increased earlier and the higher rate threshold increased bringing personal tax savings for many. Whilst welcome the personal allowance continues to reduce after £100,000 which always seems unfair to me. Many of our clients require planning to cover this aspect of personal taxation.
Some useful initiatives with others that will cause consternation and so maybe a bit of a mixed bag. But will the DUP approve? Who knows – only time will tell!
If you have any questions regarding the Autumn 2018 Budget then please call your local Lambert Chapman contact on 01376 326266.
The views expressed in this article are the personal views of the Author and other professionals may express different views. They may not be the views of Lambert Chapman LLP. The material in the article cannot and should not be considered as exhaustive. Professional advice should be sought in connection with any of the issues contained in the article and the implementation of any actions.