In view of the short-term uncertainty created by Brexit, it was never going to be a Budget for big changes. Although there was a clear signpost from the Chancellor that these may well come in the spring should the UK leave the EU with no deal.
Highlights of the Budget are detailed below.
Bringing in the personal allowance of £12,500 and a starting level for higher rate tax of £50,000 a year earlier from April 2019 was an opportunity for some political grandstanding.
This relief reduces the rate of tax paid on the sale of a business from 20% to 10% on gains up to £10 million. There are changes to some of the qualifying criteria specifically around the 5% test for shareholders of trading companies or groups and an extension to the qualifying period from one year to two years. This is designed to ensure the relief is targeted to genuine entrepreneurs and encourages and supports those building businesses of today and tomorrow.
The Principal Private Residence relief exempts a gain on the sale of a main residence from Capital Gains Tax. Periods of absence can mean the relief is not available in full, however historically the final period of ownership has been allowed to account for difficulties in the housing market.
This final period of absence of up to 18 months is being reduced to nine months from April 2020. This reduction to the final period may be considered to be premature, given market conditions.
This relief is available to homeowners who may have received rental income at some time during the ownership of their main home. The criteria for the relief is being tightened from April 2020. It will only be available where the rental income arose through shared occupation, such as a lodger.
Those using Airbnb or similar services to generate rental income when they are absent from the property will no longer be able to claim lettings relief.