Entrepreneurs’ relief (ER)

If, as a result of an issue of shares for cash after 5 April 2019, an individual’s holding falls below the required 5% minimum currently required to qualify for ER, the shareholder can elect to be treated as if their shares were sold just before the share issue (creating a gain that qualifies for ER). They can also elect to defer that gain until they actually sell the shares. Previously, the ER would have been lost as a result of the further funding being raised. Now the start-up shareholders will continue to get the lower rate of capital gains tax (currently 10%).

Optional remuneration arrangements – cars

There are clarifying provisions on the exact value of the amount to be taxed when salary has been given up in exchange for the use of a car, which will apply from 6 April 2019.

Electric car charging

The provision by an employer of charging points for employees’ electric vehicles will not be a taxable benefit. This is backdated to 6 April 2018.

Gift aid – associated benefits

The rules on the value of benefits that can be given to donors without affecting Gift Aid are to be simplified This will apply to gifts after 5 April 2019.

Rent a room relief

The relief will not apply, from 6 April 2019, unless at some point in each let the property was also slept in by the owner (or their family). So overlapping AirBnB lets will be acceptable, but not if entirely in the family’s absence.

Stamp Duty Land Tax (SDLT)

For purchases of land in England and Northern Ireland completed from 1 March 2019, SDLT will be payable within 14 days instead of 30 days.

Capital gains tax on disposal of residential property

From 6 April 2020, both non-residents and UK residents will have to pay tax on capital gains on disposals of residential property within 30 days of completion, instead of by 31 January following the year ended 5 April in which the disposal occurs.

Non-residents’ disposals of UK land and buildings and of assets deriving 75% of value from UK land and buildings

Currently non-residents (individuals, trusts, and close companies) are taxable on gains on disposal of UK residential property. From 6 April 2019 this will extend to gains realised on disposals of non-residential UK land and buildings and to non-close companies too. Furthermore, gains on disposal of substantial interests in companies that derive at least 75% of their value from UK land, etc.(except if the land is used in a trade) will be taxable. An interest is ‘substantial’ if it is at least 25% at any time in the two years preceding the disposal. Also, from 6 April 2019 ATED-related gains will end. Gains realised by non-residents carrying on a trade in the UK through a branch or agency will remain taxable as now. Tax on all capital gains affected is to be paid within 30 days of ‘completion’ of the disposal.

Non-resident companies with UK property businesses

Such companies currently pay income tax rather than corporation tax on their UK rental income, and (if close) capital gains tax on gains realised on disposal of UK residential property. From 6 April 2019 they will pay tax on gains on disposals of all UK land and buildings, with re-basing for non-residential property as at 5 April 2019 if held then. Then, from 6 April 2020, companies will pay corporation tax on their profits from UK land and buildings (income and gains), like UK resident companies.

Capital gains tax (CGT) exit charge on trusts emigrating, etc

Currently, there is a CGT charge on a deemed disposal of a trust’s assets when it ceases to be UK resident. This has been successfully challenged in certain situations under European law. So the UK law is to be changed. Where a trust ‘emigrates’ after 5 April 2019 to become resident in another EU or EEA state, and its assets were used immediately before and after the change of residence for an economically significant activity, there is still a deemed disposal, but tax may be paid over 6 years in equal instalments, with interest. This also applies to EEA individuals who have been carrying on a trade in the UK through a branch or agency, on transferring assets out of the UK.

Corporation tax loss relief and interest restriction

Changes to the loss reform legislation are to be made ‘to ensure that it meets the policy objectives which are to restrict relief for certain carried forward losses and also allow these to be used more flexibly’.Certain amendments to the corporate interest restriction rules will ensure that the regime works as intended.

Leases

Amendments to capital allowances legislation are to be made for accounting periods beginning after 2018, as a result of changes following the introduction of IFRS16.

Security deposits – construction industry

Regulations are to be made requiring deposits in respect of tax liabilities in prescribed circumstances.

VAT reverse charge for the construction industry

From 1 October 2019 it is intended that the main contractor will account for VAT on supplies to it of construction services by sub-contractors, to counter ‘missing trader’ fraud.

Penalties for late returns

A points-based system will be used so that one late return will not necessarily lead to a penalty but a series of late returns will (rather in the manner of points on a driving licence). There are additional provisions to ensure that the system cannot be used to defer tax by arranging that HMRC are unaware it is due. The start date is to be announced.

Penalties for late payment of tax

The penalties for late payment have varied greatly between taxes. The system is to be unified from a date yet to be announced. The penalties will however start at 15 days late compared with the 30 days frequently used currently.

Specific advice should be obtained before taking action, or refraining from taking action, in relation to the above. If you would like advice or further information, please speak to your usual Shipleys contact.