Bring capital losses into the loss restriction rules
Perhaps an unsurprising change. Fewer companies make chargeable capital gains since the introduction of SSE but nevertheless there are occasions when gains are chargeable (e.g. property gains). Businesses will have to look carefully before making disposals and consider the potential impact.
Structures & Buildings Allowance
This is essentially a return of the much-loved Industrial Buildings Allowance in a new wrapper. The new allowance gives tax relief for the construction cost of a new structure or building over 50 years. The economic impact will not be enormous, but any relief is to be welcomed in this area.
Reduction in special rate pool rate/increase in AIA
This is a straight reduction in the allowance rate from 8% to 6%. This has been done to more accurately reflect current commercial depreciation rates. The AIA has been increased to £1m for the next two years.
Intangibles degrouping charge
More detail is to come on this change, and at this point it is not entirely clear what impact it will have. We will find out more in the next few days but it seems that the change will be to remove the different treatments under the capital gains code and the intangibles code. This should make corporate reorganisations and splits more straightforward.
Relief for goodwill purchases
It appears that a limited relief for acquisition costs of goodwill be reintroduced. In the digital age when company intangible asset values far outweigh tangible assets this relief will be welcome.
This was trailed in the previous Budget and has been the subject of consultation. As a result it is now an income tax rather than withholding tax and applies to offshore intangible income referable to UK sales. There is a de minimis of £10m UK sales and above that there are various other exemptions.
Digital Services tax
This was one of the headline-grabbers, and it represents a genuinely new tax targeted at companies such as Facebook, Amazon and Googles. Tax is to be charged at 2% on the revenues of certain activities referable to UK users. This is not coming until April 2020 and very few details are available at the moment: implementation will be the key to its success, and the Chancellor will want to avoid the UK trying to plough ahead without international cooperation.
The holding period is now 2 years and the 5% nominal value and voting rights test is now extended to include income and assets tests. It has always been odd that the test was so narrow and that has made ER available more widely than its target. This is likely to affect a number of business owners across the UK.
R&D SME restriction
From April 2020 a restriction will be introduced on the amount of payable R&D credit that can be claimed through the SME scheme. This is an abuse prevention change but will affect more than just the abusers. There is to be consultation and Mazars will respond to that consultation to try to ensure that legitimate claimants are not adversely impacted.
At last VAT groups can include non-corporate members provided that they control the group. This change is logical and long-overdue.