Budget 2020 - highlights

The Chancellor Rishi Sunak delivered his first Budget on Wednesday 11 March. As well as making funding pledges to protect the economy from the effects of coronavirus, the Chancellor committed to increased spending on transport and infrastructure, aimed at boosting economic growth in pursuance of the Conservatives’ manifesto objectives. This article highlights some of the taxation related measures announced in the Budget.

Coronavirus economic assistance measures – Statutory Sick Pay payable from 1st day of absence; SSP cost fully funded by government for 14 days; SSP relaxed conditions for self-isolating employees; HMRC enhanced helpline and ‘Time To Pay’ assistance for businesses/individuals experiencing cash flow difficulties

Capital Gains Tax – lifetime gains qualifying for Entrepreneurs’ Relief 10% CGT rate reduced from £10M of lifetime gains to £1M, for qualifying disposals on/after 11 March 2020

Corporation Tax – Research and Development tax credit – rate increased from 12% to 13%  - effective for expenditure incurred on/after 1 April 2020

National Insurance Contributions – starting threshold for employees/self-employed increased to £9,500 per annum from 6 April 2020

Value Added Tax– ‘postponed accounting’ for VAT on imports (on the VAT return, not at ’point of entry’) effective 1 January 2021

Capital Allowances - relief on qualifying expenditure on Structures and Buildings – increased from 2% to 3% from April 2020; 100% First Year Allowance on qualifying expenditure on zero emission vehicles and equipment extended to April 2025; CO2 emission thresholds reduced in relation to certain business cars – effective from April 2021

SDLT on non-UK residents – 2% surcharge on purchase of residential property (England/Northern Ireland) – effective from 1 April 2021

Income Tax and relief for pension contributions  – income thresholds for calculating the Annual Allowance charge increased by £90,000 (removing some taxpayers from the charge); minimum tapered annual allowance reduced from £10,000 to £4,000 for higher earners – effective 6 April 2020

Value Added Tax – ‘Domestic Reverse Charge’ on construction services, deferred from 1 October 2019, confirmed for introduction on 1 October 2020

Employers’ National Insurance Contributions - Employment Allowance increased to £4,000 per annum, from April 2020

Corporation Tax – 19% rate continues from April 2020 (no change from current rate)

Income Tax rates and allowances 2020/21 – confirmed as no change from 2019/20

Income Tax – benefit-in-kind on vans and fuel for vans/company cars – increased to £3,490 (van benefit charge), £666 (van fuel benefit charge) and £24,500 (company car fuel benefit multiplier) from 6 April 2020

Capital Gains Tax – annual exemption to rise to £12,300 from 6 April 2020

Value Added Tax – zero-rating applicable to digital publications from 1 December 2020

Corporation Tax – non-resident companies with UK property income – updated legislation regarding the transition from Income Tax to Corporation Tax on profits – effective from April 2020

Income Taxtop slicing relief for life insurance policy gains – change to calculation method of top slicing relief for gains on/after 11 March 2020

As many of the announcements are subject to legislation, the details may change during the legislative process and so should be kept under review. We look forward to hearing from you to discuss any of the budget announcements and implications for you or your business.
For an in-depth look at the Chancellor’s announcements, download our Budget analysis publication from here

 

 

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