The Budget was delivered by the Chancellor Rishi Sunak on 11 March 2020. It was the first Budget we have had since the then Chancellor Philip Hammond stood up to deliver what turned out – we didn’t know it at the time - his fourth and last Budget on 29 October 2018.
Back then, many of us had probably never really heard of Rishi Sunak. If the past, as the saying goes, is another country, then Philip Hammond’s Budget now looks to have taken place on a different planet! Since then the UK has had a new Prime Minister, a general election and a new Government, two new Chancellors, has left the EU under a withdrawal agreement which ends on 31 December 2020 and, last but not least, we are now grappling with the threat posed by the coronavirus outbreak.
We have outlined below some of the key points.
Business taxes
The Chancellor was at great pains to stress his commitment to businesses, although that wasn’t enough to stop off-payroll working (IR35) juggernaut from being introduced next month, or the decision to keep the corporation tax rate at 19%, or the entrepreneurs’ relief limit being cut back from £10m to £1m for disposals on or after Budget Day.
On the credit side the Government announced a further extension of temporary reliefs for business rates for properties with a rateable value below £51,000: the discount for the upcoming year will be increased from 33% to 50% and for 2021 will be increased to 100%. In addition, he announced a fundamental review of business rates which will report in the autumn and a call for evidence will be published in the spring (ie, shortly!). He also announced an increase in the structures and building allowance from 2% to 3% with effect from 1 April 2020.
VAT
One of the surprises of the Budget was the announcement that the current zero-rating of books and printed matter will be extended to their e-equivalents. This change will apply from 1 December 2020, a slightly surprising date although this rate has been permissible under EU law since late 2018.
VAT postponed accounting will be adopted from 1 January 2021 although, ironically, that is permissible under EU law in any event.
Personal tax
There wasn’t much in the way of announcements on personal tax and national insurance. The current NIC threshold will be increased from £8,632 to £9,500 from 6 April 2020. The pensions annual allowance thresholds will be increased by £90,000 each. Thus the threshold income will now be £200,000 rather than £110,000 and the adjusted income from £150,000 to £240,000.
Other Measures
A dedicated helpline has been set up to help businesses and self-employed individuals in financial distress and with outstanding tax liabilities receive support with their tax affairs. Through this, businesses may be able to agree a bespoke Time to Pay arrangement. If you are concerned about being able to pay your tax due to COVID-19, call HMRC’s dedicated helpline on 0800 0159 559.
https://www.gov.uk/government/news/coronavirus-covid-19-guidance-for-employees-employers-and-businesses
Back then, many of us had probably never really heard of Rishi Sunak. If the past, as the saying goes, is another country, then Philip Hammond’s Budget now looks to have taken place on a different planet! Since then the UK has had a new Prime Minister, a general election and a new Government, two new Chancellors, has left the EU under a withdrawal agreement which ends on 31 December 2020 and, last but not least, we are now grappling with the threat posed by the coronavirus outbreak.
We have outlined below some of the key points.
Business taxes
The Chancellor was at great pains to stress his commitment to businesses, although that wasn’t enough to stop off-payroll working (IR35) juggernaut from being introduced next month, or the decision to keep the corporation tax rate at 19%, or the entrepreneurs’ relief limit being cut back from £10m to £1m for disposals on or after Budget Day.
On the credit side the Government announced a further extension of temporary reliefs for business rates for properties with a rateable value below £51,000: the discount for the upcoming year will be increased from 33% to 50% and for 2021 will be increased to 100%. In addition, he announced a fundamental review of business rates which will report in the autumn and a call for evidence will be published in the spring (ie, shortly!). He also announced an increase in the structures and building allowance from 2% to 3% with effect from 1 April 2020.
VAT
One of the surprises of the Budget was the announcement that the current zero-rating of books and printed matter will be extended to their e-equivalents. This change will apply from 1 December 2020, a slightly surprising date although this rate has been permissible under EU law since late 2018.
VAT postponed accounting will be adopted from 1 January 2021 although, ironically, that is permissible under EU law in any event.
Personal tax
There wasn’t much in the way of announcements on personal tax and national insurance. The current NIC threshold will be increased from £8,632 to £9,500 from 6 April 2020. The pensions annual allowance thresholds will be increased by £90,000 each. Thus the threshold income will now be £200,000 rather than £110,000 and the adjusted income from £150,000 to £240,000.
Other Measures
- Elsewhere, the Research and Development Expenditure credit will be increased from 12 to 13% – a tax cut worth £2,400 on a typical R&D claim.
- As advertised, the Employment Allowance would be increased by a third to £4,000. From 6 April 2020, businesses and charities will be able to claim the increased reduction on their employer secondary class 1 NICs. For around 65,000 businesses, the reduction would reduce their NIC bills to zero, making it easier for them to take on staff without incurring additional NIC liabilities, HMRC said.
- The Chancellor played up his climate action plans in the Budget speech, but undermined his green credentials somewhat by freezing fuel duty rates and measures.
- Plastic waste – From April 2022, manufacturers and importers will be charged £200 per tonne on packing made of less than 30% recycled plastic which will increase the use of recycled plastic in packaging by a projected 40% – “equal to carbon savings of nearly 200,000 tonnes”. Between 2022 and 2025, this would save a projected £695m.
- The structures and buildings allowance will be increased from 2 to 3%, giving an extra £100,000 of relief if you’re investing in a building worth £10m.
A dedicated helpline has been set up to help businesses and self-employed individuals in financial distress and with outstanding tax liabilities receive support with their tax affairs. Through this, businesses may be able to agree a bespoke Time to Pay arrangement. If you are concerned about being able to pay your tax due to COVID-19, call HMRC’s dedicated helpline on 0800 0159 559.
https://www.gov.uk/government/news/coronavirus-covid-19-guidance-for-employees-employers-and-businesses