In his last Budget before Brexit, Philip Hammond gave away
with one hand but did take back with the other!
The good news is that he has accelerated the increase in
personal allowances and the threshold for higher rate tax meaning that from
next April ie 6 April 2019, the personal allowance will rise to £12,500 and the
basic rate tax band will extend to £50,000. The current levels of dividend allowance and
personal savings allowance all remained unchanged, although the transferable
married allowance available to married couples/civil partners has increased to
£1,250, meaning a tax saving of £250 can be passed over to the taxpaying
spouse.
The main areas of concern for property owners is that
main residence relief is being severely curtailed from 6 April 2020. If the owner has had to move away from the
property for any reason but the property had been occupied as a main residence,
then the last 18 months of ownership were counted towards periods of occupation
as a main residence. This period of
“deemed” occupation has now been halved to only 9 months – meaning that over
the last few years this “relief” has been slashed down from 36 months to just 9
months!
Furthermore, if a property that had previously been a main
residence, was let out, then additional relief for capital gains tax was
available in the form of “Lettings Relief” up to a maximum of £40,000 but this
is to be withdrawn from 6 April 2020.
The Chancellor stated that Lettings Relief would still be available in
the event the house was in “shared occupancy” ie landlord and tenant living in
that property together but this seems a somewhat disingenuous statement because
if the landlord- proprietor was living there, he/she would get main residence
relief anyway!
There was no movement from the capital gains rates on
property of 18% and 28%.
The government will publish a consultation in January 2019
on an SDLT surcharge of 1% for non-residents buying residential property in
England and Northern Ireland.
Contractors working in the private sector are being brought
within the same IR35 changes from April 2020 that were brought in for public
sector contracting two years ago. The
IR35 rules will not apply if the engaging company is regarded as “small”. The definition of “small” is expected to be
companies with fewer than 50 employees but this still has to be confirmed. A further consultation period is expected
before the draft Finance Bill is published in Summer 2019.