Corporation tax
The main rate of corporation tax remains at 19% for 2019/20.
The intention to cut the rate of corporation tax to 17% in 2020/21 was reiterated.
Annual investment allowance
The annual investment allowance will be temporarily increased from £200,000 to £1m for a two-year period from 1 January 2019.
Transitional rules may apply to the allowance where the chargeable period spans either 1 January 2019 or 1 January 2021.
Employment allowance
The employment allowance, which provides many employers with relief of up to £3,000 per tax year from their employers’ national insurance contributions (NICs) bill, will be restricted to only those employers who had a NICs bill below £100,000 in the previous tax year.
Off-payroll working in the private sector
Following extensive and prolonged consultation, the Government announced plans to reform the off-payroll working rules – known as IR35 – in the private sector from April 2020.
Responsibility for operating the off-payroll working rules will move to the firm engaging the worker.
Small organisations will be exempt to ease the administrative burden for the vast majority of engagers, while medium and large organisations will be given support and guidance by HMRC.
Research and development (R&D)
From 1 April 2020, the amount of payable R&D tax credit that a qualifying loss-making company can receive in any tax year will be restricted to three times the company’s total Pay As You Earn (PAYE) and NICs liability for that year.
This change is subject to consultation.
Business rates on the high street
In order to provide support to the high street, the Government is to reduce business rates by one-third for many retail properties with a rateable value below £51,000 for two years from April 2019, subject to state aid limits.
Structures and building allowance
New non-residential structures and buildings will be eligible for a 2% capital allowance where all new contracts for the physical construction work are entered into on or after 29 October 2018.
Businesses that incur qualifying capital expenditure on structures or buildings used for qualifying activities will be able to claim a 2% flat rate writing-down allowance over a 50-year period, calculated on the amount of original construction expenditure.
Special rate pool writing-down allowance
From April 2019, the rate of the writing-down allowance on the special rate pool of plant and machinery will reduce from 8% to 6%.
For businesses with a chargeable period spanning April 2019, a hybrid rate will have effect for unrelieved expenditure in the special rate pool.
The hybrid rate will be based on the proportion of a chargeable period falling before the change and the corresponding proportion falling after.
First-year allowance for electric charge points
The current 100% first-year allowance for expenditure incurred on electric charge point equipment will be extended by a further four years.
The measure will expire on 31 March 2023 for corporation tax and 5 April 2023 for income tax.
Ending certain enhanced allowances
The availability of a 100% first-year allowance for certain energy-saving or environmentally-beneficial assets, known as enhanced capital allowances (ECAs), will end for energy and water-efficient plant and machinery from April 2020 onwards.
More specifically, the measure will end ECAs for plant and machinery on the energy technology list and water technology list.
Digital services tax
From April 2020, the Government will introduce a 2% tax on the revenues of certain digital businesses in an attempt to ensure the amount of tax paid in the UK is reflective of the value derived from their UK users.
The tax will:
- apply to revenues generated from business activities which include search engines, social media platforms and online marketplaces
- apply to revenues from those activities that are linked to the participation of UK users, subject to a £25m annual allowance
- only apply to groups that generate global revenues from specific business activities in excess of £500m per annum
- include a provision that exempts loss-making businesses and reduces the effective rate of tax on businesses with very low profit margins.
UK property income of non-UK resident companies
From 6 April 2020, non-UK resident companies that carry on a UK property business, or have other UK property income, will be charged to corporation tax rather than being charged to income tax.
The measure has been introduced to prevent structures that reduce tax bills on UK property held through offshore ownership.
Change to the definition of permanent establishment
A new measure was introduced in Finance Bill 2018/19 which denies the exemption from being a permanent establishment where non-resident businesses artificially fragment their operations to take advantage of exemptions and avoid creating a permanent establishment.
Corporate capital loss restriction
From 1 April 2020, the Government will restrict the proportion of annual capital gains that can be relieved by brought forward capital losses to 50%.
The announcement will include an allowance that gives companies unrestricted use of up to £5m capital or income losses each year.
Intangible fixed asset regime
The Government is to seek to introduce targeted relief for the cost of goodwill in the acquisition of businesses with eligible intellectual property from April 2019.
In addition, with effect from 7 November 2018, the de-grouping charge rules, which apply when a group sells a company that owns intangibles, will be reformed to align with rules elsewhere in the tax system.
Apprenticeships
A package of reforms will be introduced to strengthen the roles of employers in the apprenticeship programme with one of the main announcements being to halve the co-investment rate for apprenticeship training paid by smaller firms from 10% to 5%.
Class 2 national insurance contributions
As previously announced in September 2018, the Government will not abolish Class 2 NICs during this Parliament.
Diverted profits tax
Legislation will be introduced to amend the diverted profits tax regime including, but not limited to:
- extending the review period from 12 to 15 months
- closing the opportunity whereby corporation tax return amendments can be made after the review period has ended and the diverted profits tax time limits have expired.
Hybrid capital instruments
New rules for the taxation of certain corporate debt instruments, known as hybrid capital, which have some equity-like features will be introduced.
This is to ensure these are taxed in line with their economic substance.
The changes will have effect for accounting periods beginning on or after 1 January 2019.
Offshore receipts for intangible property
With effect from 6 April 2019, legislation will be introduced to tax income from intangible property held in low-tax jurisdictions to the extent that it’s referable to UK sales.
To ensure the measures are effective, appropriately targeted and robust against abuse, several rules were imposed including a de-minimis UK sales threshold of £10m and, among other changes, a targeted anti-avoidance rules for arrangements entered into on or after 29 October 2018.
Short-term business visitors
Following consultation on the tax and administrative treatment of short-term business visitors (STBVs) from overseas branches of UK-based companies, the Government will widen eligibility for the STBVs’ PAYE special arrangement and extend the deadlines for reporting and paying tax.
The intention is to reduce the administrative burdens on UK employers with effect from April 2020.