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Autumn Budget 2018 update 2 November

Autumn Budget 2018 update 2 November

As the uncertainty of Brexit looms, the Chancellor’s Autumn Budget 2018 has taken decisive action on several significant tax changes.

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Melissa Geiger

Partner, Head of International Tax and Tax Policy

KPMG in the UK

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Whilst many measures were largely expected (such as the reform of the corporate intangibles regime), others were more of a surprise (for example, the various capital allowances announcements). The headline news for international tax was the announcement of a UK Digital Services Tax, which will be levied on ‘tech giants’ with global revenues of at least £500 million. Changes to the ‘IR 35’ rules for the private sector, which shift responsibility for compliance with off-payroll working rules from individuals to the organisation paying them, have been delayed until April 2020, which will be positively received by business. There was also evidence of the impact of Brexit, with the Budget setting out a power to allow the Government to mark ‘minor’ amendments to tax legislation in a ‘no-deal’ Brexit scenario. Another full fiscal event in the spring has not been ruled out, likely depending on Brexit negotiation outcomes.

On our dedicated Autumn Budget site, we’ve covered what the Budget means for multinationals, businesses, employers and individuals, as well as our handy On a Page summary to get up to speed quickly on the key announcements. You can also listen to our webinar recording.

You can also find detailed commentary on the following measures on our Autumn Budget 2018 site:

A broad package of capital allowances measures

The changes in respect of capital allowances show a welcome commitment to businesses that invest in their physical capital asset base.

Corporate Capital Loss Restriction

The amount of capital gains that can be relieved by carried forward capital losses will be limited to 50 percent from 1 April 2020.

Government confirms introduction of UK Digital Services Tax

The Chancellor has announced the introduction of a new Digital Services Tax in the UK from April 2020.

Hybrid capital instruments

A fundamental rewrite of the tax rules governing regulatory capital, extending access to the regime beyond the regulated financial sector.

Relief for transactions involving intangible assets

The Government has listened to concerns raised over the competitiveness of the tax rules for intangibles.

Extension of taxing rights in relation to intangible property

The Chancellor confirmed the UK will introduce an expanded set of taxing rights in relation to intangible property connected with UK sales.

Reforming off-payroll working in the private sector

In a welcome move, the Government’s proposed reforms have been deferred to April 2020.

Reforming the rules for Short Term Business Visitors (STBVs)

The rules on STBVs from overseas branches of UK companies will change in 2020.

Changes to capital gains tax Entrepreneurs’ Relief

The Chancellor announced Entrepreneurs’ Relief changes which shareholders need to consider now – the key changes are discussed here.

Changes to Private Residence Relief (PRR) from April 2020

While PRR will remain for an individual’s main residence, changes will be made to two ancillary reliefs.

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