Autumn Budget 2018: Headlines for individuals
The main headline which Philip Hammond saved for the end of his Budget announcement, is that the increase of personal allowances to £12,500 and the higher rate threshold (when you pay tax at 40%) to £50,000 has been brought forward a year with effect from April 2019 rather than April 2020 as originally planned.
Capital gains tax featured a number of times in the budget. The main residence exemption for the final period of ownership reduces from 18 months to 9 months. This could be an issue where clients purchase a new main residence before selling their old house.
At present, where you have let your main residence for a period, you are able to claim a lettings exemption of up to £40,000 (per spouse). This will now only apply where the owner is in shared occupation with a tenant (similar to the current rent-a-room scheme).
Both of these two changes are due to come into effect from April 2020. This may lead to an increase in properties being sold before the new deadline.
UK residents will be required to make a return and pay capital gains tax within 30 days of completion when disposing of a UK residential property (this is already the case for non UK residents). This will apply to second homes and rental properties and will come into effect on 6 April 2020.
Stamp duty also made a number of appearances. There will be an exemption for first time buyers of shared ownership properties in England and Northern Ireland up to £500,000. This is retrospective and applies to transactions from 22 November 2017. Where appropriate, the SDLT returns can be amended and a refund claimed BUT the deadline for claims is 28 October 2019.
The government will be publishing a consultation in January 2019 on a new SDLT surcharge of 1% for non UK residents buying residential properties in England and Northern Ireland. At the moment, non UK resident companies pay income tax on rental income. From April 2020 this income will be subject to corporation tax rather than income tax.
If the above gives rise to any queries please don’t hesitate to contact Richard Mencner, head of tax and trusts at Cripps or your usual Cripps adviser.