Temporary increase in the annual investment allowance

If you claim capital allowance on things like equipment, machinery and business vehicles, you can benefit from a temporary increase to £1 million in your annual investment allowance.

The government says that “this measure will provide significantly faster tax relief for plant and machinery investments between £200,000 and £1 million, helping businesses to invest and grow.”

This policy has been in place since January 1st 2019 and will end on December 31st 2020.

Who is likely to be affected?

Businesses investing more than £200,000 in plant and machinery from January 2019.

Find out more information and how to claim the higher allowance.

Changes to VAT rules on construction services from October 1st 2020

The VAT rules on construction services are changing from October 1st 2020 for contractors and sub-contractors.

A VAT reverse charge is being introduced, which means that VAT will need to be handled and paid in a different way. The new rules mean that the contractor (customer) will have to pay the VAT due instead of the sub-contractor (supplier).

The government initially announced that these changes would be implemented on 1st October 2019, but postponed the changes for a year in early September.

The government say that “the changes are being implemented as a response to missing trader fraud and will prevent losses estimated at around £100m per year.”

HMRC guidance and support

HMRC published the following guidance in June 2019 which includes information about how to mitigate any cash-flow impacts: https://www.gov.uk/guidance/vat-domestic-reverse-charge-for-building-and-construction-services.

HMRC says it will operate a light touch period during the first six months where it will assist businesses that are trying to comply, but have struggled for genuine reasons. It says the HMRC Business Payment Support Service is aware that some businesses may require assistance with paying their taxes as a result of the loss in cash flow, and that any assistance will depend on the specific circumstances of individual cases, but might include granting businesses more time to pay the tax they owe or arranging an instalment plan.

Read more about the Business Payment Support Service.

Traders who have further concerns or questions can contact HMRC via email at indirecttax.vatsncfteam@hmrc.gov.uk.