What it means to YOU
For individuals, the amount you can earn tax free will increase to £12,500 from 6th April 2019. This is your Personal Allowance and should be fully utilised wherever possible.
In addition, the level at which you pay 40% tax is increasing. So from 6th April 2019, you can earn £50k before paying higher rate tax. You may therefore want to defer some of your income to the next tax year.
The amount that you can gain from the sale of capital assets without paying tax will also increase to £12,000. This is your Capital Gains Tax Exemption. This is relevant where you sell buy-to-let properties, etc.
If you’re planning on selling your company and are hoping to qualify for Entrepreneur’s Relief so that you pay tax at an effective rate of 10% on your sale proceeds, then additional criteria need to be achieved. One of which, is that you now need to qualify for 2 years prior to the sale.
What it means for YOUR BUSINESS
There will be rises in the National Living Wage to £8.21 from £7.83 from April 2019, which you should plan for. For a full time worker aged 25+ this is equivalent to an additional £690 and further rises are planned. Anyone paying at these levels should therefore consider the impact of this on their business model and consider whether any changes to pricing strategies are required. There will also be the planned rises in the National Minimum Wage for younger workers.
If you’re in an industry that previously used all of the Annual Investment Allowance, you’ll be pleased to know this is rising to £1m. In simple terms this is the level of fixed assets e.g. plant and machinery, equipment, etc that you can buy and obtain tax relief for in full in the 1st year. This rise is from 1st Jan 2019 and will last for 2 years. There will be planning points around this as it is always great fun calculating the allowance on during the accounting periods which transition between the two rates.
From Budget Day, there is also a new Structures and Buildings Allowance, which will provide tax relief on qualifying commercial buildings. The relief will be at an annual rate of 2%.
Yes, some points have been simplified as this isn’t a tax lecture! However as always, please feel free to contact us if you would like to understand any points further. Of course, we can also help clients to take advantage of opportunities to save tax.