Changes to VAT on vouchers were introduced on 1 January 2019 for vouchers sold on or after that date.

Prior to this change, the sale of a voucher was treated as two separate supplies for VAT purposes; the supply of the physical voucher or gift card; and the underlying goods/services it can be exchanged for.

However, from 1 January 2019 onwards, the sale of vouchers will be treated as a single supply of the underlying goods and services that the voucher can be used to purchase.

Where the goods and services in question all have a single VAT rate (for example a traditional book token) then it is classed as a ‘single purpose voucher’ and VAT will need to be charged on the sale of the vouchers at the relevant VAT rate. This widens the previous definition of single purpose voucher which only applied to vouchers that could only be used for a very specific good or service (rather than a range of goods and services with a single VAT rate), and as a result accounting for VAT on the sale of vouchers will now be more common.

However, where the goods and services that the voucher can be exchanged for have multiple VAT rates, then they are classed as a ‘multi-purpose voucher’ and no VAT is charged on the sale of the voucher, with VAT instead accounted for at the point of redemption.

The Employment Allowance covers the first £3,000 pa of Employers National Insurance, and is currently available to all but the very smallest employers.

The Employment Allowance was originally introduced in April 2014 to encourage businesses of all sizes to grow and hire staff, by covering the first £2,000 per annum of Employers National Insurance.

This allowance was increased to £3,000 per annum from April 2016 onwards.

The introduction of the Employment Allowance led to the optimum salary level for many company owner managers increasing from the NIC threshold to the personal allowance level.

To combat this, changes were made from April 2016 which meant that businesses where the Director is the only employee could no longer claim it.

However, it was announced in Budget 2018 that the Employment Allowance will be further restricted from April 2020 onwards, so that employers with an Employers NIC liability of at least £100,000 per annum will no longer be able to claim it.

To put this into context, this means that any employer which pays gross salaries in the region of £1m per annum or higher will no longer qualify for this £3,000 allowance.

For further advice on this matter please contact me.

It was announced that, with effect from April 2020, the current extension of private residence relief to periods where a private residence is let out (known as ‘letting relief’) will only apply where the owner is in shared occupancy with the tenant. This represents a major change. In addition, the exemption for the final 18 months of ownership will be halved to the final 9 months of ownership.

Following a call for evidence on the design of the UK VAT threshold (which is higher than most other countries), the government have decided to freeze the registration threshold at £85,000 until 2022. With Making Tax Digital for VAT arriving in April 2019, which only applies to VAT registered businesses with a turnover above the VAT registration threshold, this provides greater certainty.

From 6 April 2019, the minimum period that the conditions must be met to qualify for Entrepreneurs Relief will be extended from 12 months to 2 years. With Entrepreneurs Relief giving a 10% Capital Gains Tax rate on the sale of qualifying business assets, including shares in unquoted companies, those considering a business sale may now need to plan further ahead.

In a measure designed to reduce tax leakage where multinational companies operate online platforms and pay little or no tax in the UK, a new 2% digital services tax will be levied on revenues from the UK market in relation to search engines, social media platforms, and online marketplaces.

In a bid to help independent retailers (shops, cafes etc) on our high streets, a one third business rates discount will be given on retail properties with a rateable value below £51,000 for a 2 year period, commencing April 2019. This is expected to benefit up to 90% of retail properties.