To the relief of many there will be no immediate reduction to the VAT registration threshold although it will remain frozen at £85,000 for two years. The government will keep this issue under review, they will consult on the design of the threshold and consider how to address distortions and barriers to growth caused by the threshold. Any changes should now come after Brexit and the introduction of Making Tax Digital for VAT.


SA & Personal Allowance

The manifesto commitment to raise the personal allowance to £12,500 and the higher rate threshold to £50,000 was reiterated. As steps towards this goal, the personal allowances will increase to £11,850 for 2018/19 and the higher rate threshold to £46,350. There are no significant changes to rates and allowance; notably, there are no changes to the tax treatment of dividends or to tax relief for pension contributions.


Corporation Tax

The planned reduction of the rate of corporation tax to 17% from 2020 was reconfirmed. Indexation relief in calculations of chargeable gains by companies will be frozen from 1 January 2018. The increase in the rate of the R&D expenditure credit from 11% to 12% and the doubling of the limits for Enterprise Investment Scheme will help support innovative businesses.


Tax Evasion

After the Paradise papers, it was inevitable that the Budget would feature further measures to tackle tax evasion and avoidance. The devil will be in the detail and these measures will need careful consideration. It is proposed that withholding taxes will be deducted on royalty payments from then UK to low tax jurisdictions where the payments relate to UK sales and that the assessment time limit for non-deliberate offshore failure to comply will be extended to 12 years.




source : Caroline Miskin ICAEW