(6) Tackling large company tax avoidanceAlthough few details were unveiled, the chancellor has published a series of suggestions for tackling the tax challenges posed by digital economy companies. One longstanding issue the government is taking immediate action on, is ensuring that multinational digital businesses cannot claim royalties on UK sales without paying any UK tax. Starting from April 2018, there will be income tax payable on all royalties relating to UK sales when the royalties are paid to a low tax jurisdiction, even if they do not fall to be taxed in the UK under current rules. This is expected to raise £200m in extra revenues each year and although Hammond admits it won’t solve the problem, it does as he says: ‘send a signal of determination, while we continue to search for a proper international solution to properly tax the digital businesses that operate in cyberspace.
(7) Tackling VAT fraudFurther anti avoidance measures are being introduced to address the £1.2bn problem of online VAT fraud, which is a constant issue and prevalent in e-commerce marketplaces. To solve this problem, the government is making all online marketplaces and their sellers jointly liable for VAT. This means that in future, high street retailers won’t be trading at a disadvantage because e-tailers will also face the same level of VAT.
(8) Stamp duty relief for first time buyersAnyone listening tothe Budget 2017 speech will recall that this was the measure that provoked the biggest reaction in the Commons. Another of the pre-budget rumours, this one did materialise. Stamp duty for first time buyers is being abolished on all property purchased up to the value of £300,000. In the case of London buyers, it will also be available on the first £300,000 of the purchase price of properties costing up to £500,000. In real terms, this means an effective price cut of £5,000. Overall, 95 per cent of all first-time buyers will benefit, with 80 per cent not paying any stamp duty at all.
(9) Increase to EIS investment limitsEIS has been an extremely powerful way of attracting investment finance for start-up companies and a contributing factor behind the UK’s ability to “launch a new company every hour”. Hammond today announced that the existing tax relief for “knowledge intensive companies” will be doubled to £2m, but also acknowledged that this did not mean that EIS could be used as “a shelter for low-risk capital preservation schemes”. Few details about exactly what qualifies as a “knowledge intensive company” were released, and there is a suspicion that his second statement means more restrictions are to be introduced for other companies. Apparently however, it will mean an additional ?7bn in investment finance being unlocked, which can only be a good thing.
(10) Greater financial support for individualsFrom April 2018, the personal allowance will be increased to £11,850 and the higher rate threshold to £46,350. In addition, the National Living Wage will be rising in April by 4.4 per cent to ?7.83. Over the coming weeks, as more details on the Budget 2017 announcements are released, we will be providing updates on the impact these changes will have on business owners. Lesley Stalker is a tax partner at RJP LLPAnd can be reached firstname.lastname@example.org?with any Budget 2017 questions. [rb_inline_related]
Share this story