Tax Changes from 6th April 2019

NEW TAX YEAR CHANGES

The new tax year begins on 6th April 2019 and with comes some changes to personal taxes.  In our latest download we highlight some of the more important changes.

THE CHANGES

The changes include: –

  • Increase to the personal allowance
  • An extension to the higher rate threshold
  • Inheritance tax changes
  • Increases to the student loan thresholds
  • Junior ISA increase
  • Workplace pensions get a revamp,
  • The changes affecting private resident [buy-to-let] landlords continue.

TAX CHANGES PUBLICATION

To get a full summary of the changes just click on the link below:

Tax Changes 6 April 2019

MAKING TAX DIGITAL FOR VAT

Making tax digital (MTD) for VAT officially started from 1st April 2019

MTD is the long-term project to modernise the UK tax system and to bring tax compliance fully into the digital age. The ultimate goal is for all regular transmissions of data between taxpayers and HMRC to be performed digitally, and where possible automatically, through accounting software.

This will take many years to achieve. HMRC needs to improve its own internal systems and provide new digital services to taxpayers for full digitisation of the tax system to be achieved. MTD for business is being introduced tax by tax, not by business size or type. Eventually, each business will have to submit separate MTD reports for the taxes it pays to HMRC.

To find out more about MTD for VAT just click on the link below:

MTD – VAT

CAPITAL GAINS TAX – ENTREPRENEUR’S RELIEF

For disposals after 6th April 2019, the minimum period for which certain conditions must be met to qualify for entrepreneur’s relief will be two years.

The one-year rule remains where the claimant’s business ceased, or his personal company ceased to be a trading company before 29th October 2019

Personal Company – new definition (for shares disposed of from 29th October 2018)

In addition to the existing share capital and voting rights conditions, a company will also have to satisfy two further conditions to qualify as an individual’s personal company.

The new conditions require the individual to be beneficially entitled to at least 5% of the company’s distributable profits and at least 5% of its assets available for distribution to equity holders in a winding-up.

The second change, expected to apply to disposals on or after 6 April 2019, is that the minimum period throughout which the relevant conditions (depending on the type of disposal) must be satisfied is to be increased from one to two years, although the new two year rule will not apply to businesses that ceased before 29 October 2018 where entrepreneurs’ relief is claimed in respect of the sale of an asset or shares within three years of the cessation.

Alphabet Shares?

There were concerns that the new rules would create issues for companies with alphabet shares.  After lobbying a late amendment was introduced.

The new test asks: “will the shareholder be entitled to at least 5% of the proceeds in the event of the disposal of the whole company?”

The new hypothetical sale test only applies to disposals made from 21st December 2019.

Entrepreneur’s “banking” from 6th April 2019

  • Applies when individual loses entitlement to ER as holding falls below 5% threshold due to a new share issue.
  • Elect to treat shares as disposed of immediately.
  • Deemed disposal at MV [with no discount for minority holding].
  • Resulting gain eligible for ER.
  • Shares reacquired at same MV.
  • Can postpone the ER gain until the year you actually sell the shares.

KEEPING UP TO DATE WITH TAX

Not only are our tax rules complex but they are constantly changing.  To ensure that you do not get caught out with an unnecessarily excessive tax bill you should always consult with an expert before making changes that may give rise to tax charges.  To ensure you do not get caught out, contact Paul Southward.  Initial consultations are without charge or obligation.  You have nothing to lose and potentially lots to gain form talking with us first.