Autumn Budget 2017 Summary Seminar

By Your Side. On Your Sidewww.thomaswestcott.co.uk
Welcome
The agenda for this morning’s seminar is as follows:
07.45am – 08.30am
Seminar Registration and Buffet Breakfast
08.30am – 09.15am
Budget Briefing 2017 Presentations
Presenters:
Dale Simpson
Michael Marsh
Questions
09.15am
End

Axminster · Barnstaple · Bideford · Bridgwater · Burnham on Sea · Crediton · Exeter · Holsworthy · Honiton · Ilfracombe
· Okehampton · Plymouth · Seaton · Somerton · Tiverton · Torquay · Weston super Mare

Michael Marsh – Welcome
Dale Simpson – Personal tax, property tax, MTD
Michael Marsh – Business tax, tax administration
Any questions
and Domicile – Michael Marsh

Personal taxes
 Increase in the personal tax allowance and basic rate tax band
 Marriage allowance – Transfer of personal allowance between spouses
– Extension to claims for deceased spouse/civil partner
– Claims to be backdated for up to 4 years
– Effective from 29 November 2017
 Pension scheme – lifetime allowance increase from £1,000,000 to £1,030,000
 CGT annual exemption increased to £11,700 (trusts £5,850)

Property taxes
 SDLT relief for first time buyers
– No SDLT on first £300,000
– 5% on remainder
– No relief if total consideration more than £500,000
 Interesting reliefs from SDLT surcharge
– Court order on divorce prevents someone disposing of their
interest in main residence
– A spouse buys property from their spouse
– Purchase in a child’s name in capacity of deputy for that
child
– A purchaser adds to their interest in their main residence

Property taxes
 CGT – 30 days payment window on the sale of residential property deferred
until April 2020
 CGT for non-residents selling UK immovable property
– After 2015 UK residential property sold by non-resident
– 30 days to report disposal on a non-resident CGT return
– Broadened from residential property to immovable property
– Changes take effect from April 2019

Property taxes
 Income tax – mileage rate for landlords as an alternative to claims for
capital allowances and actual expenses
 Income tax – rent-a-room relief
– 2015/2016 - £4,250
– 2016/2017 - £7,500
– Was intended to support longer term lettings
– HMRC to call for evidence on eligibility
– Following misuse through such schemes as Air B&B
 ATED charges to increase by 3% from April 2018

MTD
 Change of scope and pace of implementation
 MTD for businesses deferred from April 2018 to at least April 2020
 MTD for VAT to go ahead from April 2019
– Mandatory for businesses over VAT threshold (£85,000)
– Only in relation to VAT obligations
– Businesses below VAT threshold can use MTD voluntarily

Business tax
 R&D
 Venture capital schemes
 Indexation allowance
 VAT

R&D
 R&D Expenditure Credit (RDEC)
 Taxable receipt
 Rate to increase from 11% to 12%
 Effective from 1 January 2018

RDEC example
2017
£
2018
£
Turnover 50,000,000 50,000,000
R&D expenditure (10,000,000) (10,000,000)
RDEC @ 11%/12% 1,100,000 1,200,000
Other expenditure (30,000,000) (30,000,000)
Profit before tax 11,100,000 11,200,000
CT @ 19% 2,109,000 2,128,000
RDEC (1,100,000) (1,200,000)
CT payable 1,009,000 928,000
CT saving £891,000 £972,000

SME R&D
 Campaign to increase awareness of R&D reliefs
 New Advance Clearance service to provide pre-filing agreement for
three years
 230% of actual expenditure
 14.5% ‘tax credit’
 SME criteria:
- Fewer than 500 employees
- Turnover less than 100m euros
- Balance sheet total 86m euros

SME R&D
Qualifying expenditure
 Revenue in nature
 Staffing costs
 Consumables

R&D
 “Creative or innovative work in the field of science or technology with a
view to extending scientific knowledge of technical knowledge”
- Look for advance in science or technology in overall field
- Try to overcome an area of uncertainty
- Attempt innovative solution
 Examples:
- Development of new stock control software
- Website rebuild
- Redesign of premises to improve efficiency
- Mechanised curtain pole!

SME R&D example
No claim
£
Claim
£
Turnover 5,000,000 5,000,000
R&D (500,000) (500,000)
Other expenditure (3,000,000) (3,000,000)
1,500,000 1,500,000
R&D claim (130%) - (650,000)
1,500,000 850,000
CT payable 285,000 161,500

Venture capital reliefs
 Restrictions on schemes where ‘capital risk’ minimal
 Increased limits for investments in ‘knowledge intensive companies’
 Streamlining of advance assurance service
 Schemes
- EIS
- SEIS
- VCTs

EIS
 Income tax relief @ 30%
 CGT deferral on entry
 CGT exemption on exit
 IHT BPR relief
 Three year holding period
 £1m investment cap per year
 Company requirements

SEIS
 Income tax relief @ 50%
 50% CGT exemption/50% CGT deferral on entry
 CGT exemption on exit
 IHT BPR relief
 Three year holding period
 £100k investment per year
 Company requirements

VCTs
 Income tax relief at 30%
 Income tax exemption on dividends
 CGT exemptions on exit

Venture capital reliefs – Risk to capital condition
 Relief to be focused on companies where real risk to capital invested
 Exclusion of companies intended to provide capital preservation
 Two tests:
- Whether company has objectives to grow and develop
- Whether significant risk that could be loss to investor of amount
greater than net investment
 Subjective ‘principles’ test

Venture capital – increased limits for knowledge –
intensive companies
 Limit on taxpayer investment increased from £1m to £2m per year
 Limit on annual company fundraising from £5m to £10m
 Corporate lifetime limits remains at £20m
 Investment period to run from when turnover > £200k rather than first
sale

Company indexation allowance
Individuals
 Frozen from 1998
 Abolished 2008
Companies
 To be frozen at December 2017
 Inflation element of gains to be taxed from January 2018

VAT
 No change!
 Registration/deregistration thresholds frozen for two years
 Consultation on future of the threshold

Tax administration
 Time limits for offshore non-compliance
 Certificates of tax deposit
 Late submission and late payment sanctions

Time limits for non-compliance
Current
Onshore/offshore
Proposed offshore
Ordinary 4 years 12 years
Careless 6 years 12 years
Deliberate 20 years 20 years

Certificates of tax deposit
 No further certificates can be purchased
 Existing certificates honoured until 2023

Late submission of late payment sanctions
 Currently automatic penalties and surcharges for most late filed
returns and late paid tax
 Consultation on introduction of a points based model

THANK
YOU
“The content of this presentation has been prepared as a guide to topics of current financial business interest. We strongly recommend you take
professional advice before making decisions on matters discussed within. We can accept no responsibility for any loss to any person acting, or
refraining from acting, as a result of this material.”

Autumn Budget 2017 Summary Seminar

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