Recent Changes & Updates
All the recent key changes : National insurance cut further by 2p in April – from 10% to 8%; High Income Child Benefit Charge threshold raised from £50,000 to £60,000. The charge is tapered so if you, or your partner, earn between £60,000 and £80,000; Introduction of British ISA, allowing extra £5,000 investments in UK; VAT registration threshold for businesses upped from £85,000 to £90,000; Reduction of higher capital gains tax rate on property from 28% to 24%. Class 2 National Insurance for self-employed will be abolished. Minimum wages will be increased to £12.21 per hours over 21 years old from april 2025 (£11.44 per hours 2024). Full expensing capital allowance for new plants and machinery for companies. R&D and RDEC relief will be combined from April 2024. From 6 April 2025, the current remittance basis regime will be replaced with a new residence-based test. Foreign Income and Gains rules (FIG regime) for individuals will be taxed on their worldwide income and gains in accordance with the normal tax rules for UK residents. Reduction in the Dividend Allowance to £500 from April 2024. Reduction of CGT annual exemtion to £3,000 from April 2024. Increases the Employment Allowance to £10,500 from April 2025 and £100k cap withdrawn. No changes PA, income tax and VAT rate. Corporation tax rate for small profit 19% (profit up to 50k) it will be trapper- profit 0ver £250K tax @25% and from 2023 CT rate @25%. SME R&D relief is capped £20,000 plus 3 X PAYE & NIC.
VAT Reverse Charge for Construction Industry
VAT reverse charges for building and construction services has been delayed to 1 March 2021 (it was due to apply from the 1st October 2020), in order to tackle fraud in the construction industry. The reverse charge will apply individuals or businesses registered for VAT in the UK , this mean the customer receiving the service will now liable to account for VAT and have to pay the VAT due to HMRC instead of paying the supplier. The VAT cash amount will no longer flow between businesses and will have to be registered and need to mention on the invoice as a reverse charge apply. For more information about the VAT reverse charge, click here
Capital Gains Tax: Change in PPR and lettings relief
From the 6th April 2020, for the calculation of PPR the final 18 month exemption will be reduce to 9 months. Also deemed occupation at start of ownership to be limited to 24 months. Married couples/civil partners can only have one principal private residence (PPR ) Relief on one property. From April 2020 you can transfer only the principal private residence history to your spouse, not any other property.
This mean, it will increase the capital gain tax liabilities for anyone selling their main resident where apply PPR. Lettings Relief would be removed from 6 April 2020 onward. The proposed changes to lettings relief will potentially only be available to landlords who shared occupation of their main house with a tenant. Lettings relief can reduce capital gains tax due on the sale of a property as you can claim up to £40,000 individually or up to £80,000 if a partner or spouse jointly owns the property.
UK property held by non-UK residents company
Changes from 6 April 2019, UK property gains released by non-UK resident companies are subject to corporation tax instead of CGT. Non-resident companies are no longer be required to complete NRCGT returns, as they are not required under Corporation Tax. The ATED-related capital gains tax is abolished. The normal Corporation Tax filing and quarterly payment rules apply. A Corporation Tax return will be required for that shortened accounting period. This mean, the disposal of a UK property will result in a one-day accounting period, as result a single stand-alone company will be considered very large for the corporation tax payment and CT will be payable 3 months and 14 days after the end of the one-day accounting period. However, by concession where there are 4 or more disposals, HMRC accept a 12 month accounting period.
Changes from 6 April 2020, Non-UK resident companies that carry on a UK property rental business or have other UK property income will be liable to corporation tax instead of income tax. For more information, click here
