With Brexit continuing to dominate the headlines, the Chancellor’s Spring Statement arrived under quieter fanfare this year. Keeping to the brief of only having one major fiscal event per year, it was low on immediate impact. Instead it referenced previously trailed measures approaching introduction, together with sowing the seeds for forthcoming changes, which we might expect to see as early as the Autumn 2019 Budget. These included numerous tax consultation documents which were published or trailed, with items of key interest to the Owner Managed Business sector summarised below:
Making Tax Digital (MTD) – Mandatory digital record keeping for VAT for businesses over the VAT threshold (with turnover over £85,000) comes into force from 1 April. The Government has confirmed a light touch approach will be applied to penalties in the first year of implementation: where businesses are doing their best to comply, no filing or record keeping penalties will be issued. The focus will be on supporting businesses to transition and the Government will therefore not be mandating MTD for any new taxes or businesses in 2020.
Capital allowances – The new Structures and Buildings Allowance, which is to provide a 2% per annum flat rate allowance on new commercial structures and buildings constructed after 28 October 2018, moved a step closer to implementation, with legislation scheduled to be passed this Summer.
VAT – The Partial Exemption regime and Capital Goods Scheme are to be examined, with a view to potential simplification.
Corporation Tax – Following the 1 April 2017 changes to corporate loss rules, there is to be consultation on limiting the amount of carried-forward capital losses a company can offset, from 1 April 2020, to no more than 50% of the chargeable gains arising in a later accounting period.
Anti-avoidance – on top of the 100 plus anti-avoidance measures the Government has introduced since 2010, the Small and Medium Enterprise R&D tax relief and offshore tax compliance were specified as ongoing targets of efforts in this area, accompanied by minor technical changes to the General Anti-Abuse Rule (‘GAAR’).
Enterprise Investment Scheme (EIS) – Draft guidelines are to be issued, stating HMRC’s proposed policy, powers and practice for approving EIS funds.
Capital gains tax – There is to be consultation on the changes to Private Residence Relief announced at Budget 2018, covering lettings relief and the final period exemption.
Stamp Duty – A consultation which contemplates the introduction of a general market value rule for transfers between connected persons.
National Insurance Contributions (NICs) – A proposal to restrict the NIC Employment Allowance to businesses with an employer NIC bill of below £100,000.
Child Trust Funds (CTF): A consultation on maturing CTFs to ensure that they can retain their tax-free status after maturity.
Whilst many of the above measures are subject to consultation, they may be anticipated to find their way into legislation in some guise and so may already begin to influence personal or business planning decisions.