Posted by Tax Innovations on 13 Apr 2018

Finance Act 2018 Enacted

On 15 March 2018, the Finance Act 2018 received Royal Assent, bringing the third Finance Act of the 2017/18 period into force.

After two weighty Finance Acts over the course of 2017, the Finance Act 2018 is a somewhat smaller Act with minor changes that had previously been announced or which resulted from long-running consultations. The main items brought into force from 6 April 2018 onwards (unless otherwise specified) are:

 

Personal Tax and Employment

 

  • ‘Foreign service relief’ in respect of overseas work whilst non-UK tax resident will cease to be available to UK tax residents.
  • The 3% diesel surcharge for company cars is increased to 4%, as well as the previously announced increases to the company car benefit in kind rates.

 

Business and Corporate Tax

 

  • Tax rules for partnerships have been amended in order to clarify the taxation of indirect partners (e.g. beneficiaries of trustee partners can be taxable on partnership profits).
  • Capital gains tax (CGT) indexation has been frozen at December 2017. No relief for inflation will be received by companies from this point onwards, matching the position for individuals that has been in place since 6 April 2008.
  • The RDEC (Research & Development Expenditure Credit) rate has increased from 11% to 12% for expenditure incurred on or after 1 January 2018.
  • The rules for qualification under the Enterprise Investment Scheme (EIS) and Seed Enterprise Investment Scheme (SEIS) now include a requirement for the shares to include a “risk to capital”, plus the qualifying criteria have been made more generous for “knowledge-intensive companies”.

 

Other Taxes

 

  • SDLT (Stamp Duty Land Tax) relief for first-time buyers has been introduced for purchases after 22 November 2017, so that no SDLT is charged on the first £300k of the purchase price.
  • The 3% SDLT surcharge rules have been amended for purchases after 22 November 2017 to prevent certain transactions being caught, including increasing ownership share of a property and for separated spouses.
  • Online marketplaces will be held jointly and severally liable for the VAT liabilities of vendors on their sites.

 

Anti-Avoidance

 

  • An additional ‘gateway’ to the ‘disguised remuneration’ legislation is added in order to prevent close companies being used to avoid tax on employment income.
  • The ‘settlements legislation’ is extended to include benefits received from settlor-interested trusts, as well as income and capital.
  • The ‘stockpiled gains’ legislation for gains arising to overseas trusts is amended to stop gains being allocated to payments to non-resident beneficiaries of the trust, increasing the likelihood of tax on UK-resident beneficiaries.

Tax Innovations can advise on the impact the above changes could have on your tax position.

If you would like any advice regarding the third Finance Act of the 2017/18 period coming into force or would simply like to discuss other ways in which we could help you or your business, please contact us on 01962 856 990 or customerservice@taxinnovations.com

 

See also…

Disguised Remuneration Update – Loan Charge Enacted

Finance Bill 2017 Update!

Election Result Increases Tax Uncertainty

Autumn Statement 2016

Tax Rates and Allowances

EIS and SEIS Investments

Property Partnership Incorporation and SDLT

Stamp Duty Land Tax (SDLT) Changes

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