Philip Hammond delivered his Spring Statement yesterday. While on the face of it there were no major announcements or tax changes, there was a surprise announcement, hidden away, relating to Making Tax Digital (MTD).
The income tax element of MTD was expected to commence in 2020. However there appears to have been a change of heart with HMRC accepting that MTD for income tax is delayed until it has been thoroughly tested and then most likely introduced on a voluntary basis. Further details on the release date have yet to be made available, but it is rumoured to be delayed at least until 2021. This has been a welcomed move by the Chancellor giving business much need support in the transition to digital record keeping. MTD for VAT continues to apply.
Mr Hammond and his colleagues have other things on their mind with regards to Brexit. However he has confirmed there will be another spending review before the summer break once the Brexit issues have been resolved.
• There were no specific announcements made with regards to changes in rates or allowances for personal tax.
• Further consultations will be announced on the removal of lettings relief and the reduction of the final period exemption following on from his announcement in the Budget 2018.
• Structures and Building allowances (SBA) which was announced in the Budget 2018 has been published in draft with further details to follow early this summer. This is a new capital allowance of 2% per annum over 50 years for investments in non-residential structures and buildings to create a more competitive tax regime for businesses.
• There will be further consultations on the proposal to restrict the National Insurance Employment Allowance to smaller businesses i.e. those with a National Insurance bill of below £100K.
• The government will publish a further statement on the provision which would make HMRC a preferred creditor for certain tax debts in an insolvency case.
• Further clarification on the simplifying the process of amended tax returns is expected.
• Consultations on aligning the consideration rules with regards to stamp duty and stamp duty reserve tax and introducing a general market value rule for transfer between connected persons.
• Changes to Corporate Capital Losses Restriction which was announced in the Budget 2018. A further consultation will be released on the restriction on the amount of carried forward capital losses a company can offset i.e. no more than 50% of the chargeable gain arising in a later accounting period.
• A consultation, as part of the tax avoidance package, will take place to prevent abuse of Research and Development (R&D) tax relief for SME’s, which allows qualifying firms to claims 230% deduction on qualifying R&D expenses as a tax credit.
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