On 22 November Philip Hammond delivered the first Budget of the new government. While there were few surprises, at Canada Life we welcomed many aspects on the Budget, in particular moves toward increasing the simplicity and fairness of taxes around trusts.
As a whole the Budget reflected a confidence in the current legislation, a confidence that should engender further stability and consistency in the way advisers help their customers achieve their financial goals.
To find out more you can read our Autumn Budget guide or read our short summary below.
Corporate indexation relief
The government will freeze the corporate indexation allowance from 1 January 2018. No relief will be available for inflation accruing after this date in terms of calculating capital gains made by companies.
Inheritance tax receipts
It was announced that in 2018 the government will consult on how to make the taxation of trusts ‘simpler, fairer, and more transparent’. We look forward to receiving further information as we are of course in favour of simplifying tax.
Anti-avoidance rules for offshore trusts
The government will legislate in the Finance Bill 2017-18 to introduce new anti-avoidance rules that relate to the taxation of income and gains accruing to offshore trusts. This measure ensures that payments from an offshore trust intended for a UK resident individual do not escape tax when they are made via an overseas beneficiary or a remittance basis user.
Key general changes for the forthcoming 2018/19 tax year include:
- The income tax personal allowance will rise to £11,850.
- The higher rate tax threshold will rise to £46,350.
- Junior ISA and child trust fund limits will rise to £4,260, although other ISA limits are unchanged.
- The pension lifetime allowance will rise to £1.03 million.
- The VAT registration threshold will be frozen at £85,000 for 2018/19.
- The company car benefit in kind charges have been increased – notably for diesel car drivers.
- Capital allowances for R&D expenditure will rise from 11% to 12%.
- First time buyers in England, Wales and Northern Ireland will pay no stamp duty land tax on the first £300,000 of the purchase price of their home, as long as the consideration is no more than £500,000. Above £300,000, they will pay the normal rates of SDLT.
The Scottish Budget will be published on 14 December when their income tax plans for 2018/19 will be announced.