As usual, the more interesting Budget changes didn’t feature in the Chancellor’s speech but in the documents produced by HMRC. What important changes might you have overlooked?
Hidden agenda. These days the Budget speech is more of a media show than an explanation of changes to government finances. Several important changes were hidden in the fine print and we’ve summarised a few of them that you might have missed.
Capital allowances. There’s bad news relating to the capital allowances deductions for several types of asset, including thermal insulation of buildings and integral features. The rate of writing down allowances will reduce from 8% to 6% from 1 April 2019 for corporation tax and 6 April 2019 for income tax.
Private residence relief. The Chancellor announced two unexpected and unwelcome changes to private residence relief which apply when you sell your home for more than you paid for it. Both will come into force from 6 April 2020. The changes are:
o the exemption which applies to gains attributable to the final 18 months you own your home will only apply to the final nine months
o lettings relief, which currently exempts up to an extra £40,000 of gain if you let your home at any time, will only be available where you occupied the property at the same time as the tenant.
HMRC to consult. Hopefully this will prevent any unfair loss of tax relief for those affected by the new restrictions. We’ll report on the consultation when HMRC makes it available.
Relief. There is to be a brand new tax relief for expenditure on construction, improvement and renovation of commercial buildings contracted for on or after 29 October 2019. The finer details will be hammered out through consultation – we’ll keep you informed. However, we can tell you that the “structures and buildings allowance” will be given as an annual deduction on a straight-line basis at the rate of 2% of the qualifying expenditure.
