The Chancellor’s Treasury deputy Liz Truss said there would be “no red box, no rabbits out of the hat and no tax changes” in the Spring Statement and that proved to be true.
Some of the most interesting points of the Spring Statement weren’t included explicitly in the Chancellor’s address to the House of Commons but are in the accompanying consultation papers.
This is our top 5 of the 13 consultations in progress (click here for a downloadable PDF of our top 5):
1. VAT registration threshold
The UK VAT registration threshold is £85,000 until March 2020; the average in the EU and OECD is around £29,000.
The consultation sets out to explore “growing anecdotal, academic and data-based evidence that the cliff-edge nature of the VAT threshold acts as a disincentive for small business owners who want to expand.”
The online survey is open for consultation until 5th June: https://www.surveymonkey.co.uk/r/W7TLCZ7
2. Entrepreneurs’ relief on gains made before dilution
Entrepreneurs’ relief (ER) provides a 10% Capital Gains Tax (CGT) rate for gains on qualifying business assets, compared with the main higher rate of 20% (or 28% on residential property). This means that entrepreneurs can keep more of the rewards when their business is successful.
However, entitlement to the special 10% rate of CGT may be lost when an entrepreneur’s company issues new shares and as a result causes their personal stake to fall below 5%.
The suggestion is that the government will introduce legislation in Finance Bill 2018-19 to allow an individual in this position to elect to be treated as if they had disposed of their shares and reacquired them at their market value just before the time the company issued new shares. The individual could then claim Entrepreneurs’ Relief on that gain either at the time of election, or on a future disposal of shares.
The consultation closes on 15th May.
3. Corporate tax and the digital economy
The Spring Statement continues from the Autumn Budget where the government set out its position on multinationals, corporate tax and the impact and scale of change of digitalisation, and in particular the impact of digitalisation on the principle of business profits being taxed in the countries in which it creates value. The updated position paper released today looks at the possibility of revenue-based taxes as an interim measure.
4. Taxation of self-funded work-related training
The Autumn Budget 2017 announced that the government would consult on how it could extend the existing tax relief available for self-funded work-related training by employees and the self-employed.
Some employees pay for work-related training and this is not reimbursed by their employer. Employees cannot currently receive tax relief other than in limited circumstances when the training is an intrinsic contractual duty of their existing employment.
Responses to the call for evidence on employee expenses in 2017 indicated that some feel this is unfair. The self-employed can deduct the costs of training incurred “wholly and exclusively” for their business where it maintains or updates existing skills but not when it introduces new skills.
Consultation closes 8 June 2018.
5. Financing growth in innovative firms: Enterprise Investment Scheme knowledge-intensive fund consultation
This consultation aims to build the government’s understanding of the capital gap that knowledge-intensive companies face, and seeks views on the best way of closing that gap. It explores possible options for an EIS fund structure aimed specifically at investment in knowledge-intensive companies, while making clear the limitations within which such a fund model would operate.
The consultation applies to patient capital, defined as “long-term investment in innovative firms led by ambitious entrepreneurs who want to build large-scale businesses”.
It noted that only some firms need patient capital to grow to scale.
Options for the EIS could include dividend tax exemption; CGT relief; extended carry-back of income tax or CGT deferral; up-front tax relief.
Consultation closes 11 May 2018.
Also of interest to online businesses is the consultation around VAT split payment. This includes the proposal to use payments technology to collect VAT on online sales and send it directly to HMRC. It is mainly designed to combat overseas businesses selling goods online to UK consumers without paying the correct UK VAT. The closing date for comments is 29 June 2018.
If you’d like to discuss how these consultations might relate to your situation, call us on 01761 241 861 or email us today. We will be pleased to speak by phone or to invite you into our offices in Paulton, near Bristol and Bath, for a consultation.
Click here for a downloadable PDF of our top 5 picks from the Spring Statement.