Rishi Sunak presented the (first) 2020 Budget on Wednesday 11 March 2020.
This blog focuses on the direct and indirect tax measures announced, as well as the announcements made previously which affect the 2020-21 tax year and beyond for English tax payers.
It concentrates on the issues likely to affect you, your family and your business.
If you have any questions please do not hesitate to contact me for advice.
Following on from the Bank of England’s reduction in the base rate from 0.75% to 0.25%, Mr Sunak announced a packages of measures aimed to help deal with the disruption likely to be caused by the coronavirus. These include:
- Funding to support public services including increased funding for the NHS and other public bodies
- Support for individuals, including statutory sick pay (SSP) being due from day 1 for those self isolating and relaxation of benefits for the self employed
- Help for businesses, including:
- Allowing small and medium sized businesses (with under 250 employees) to reclaim SSP for up to two weeks for employees who have been off work with COVID-19. This will not be an automated refund via the normal PAYE system since the system is no longer set up to refund SSP.
- Increasing and extending business rates retail/leisure/hospitality discounts
- The provision of one-off grants of £3,000 to help small businesses currently eligible for small business rate relief.
- Introducing a temporary loan scheme for businesses
- Extension of the HMRC time to pay scheme through a new dedicated helpline.
More details of these measures can be found on the government website here.
Main Budget proposals from the Budget
- The lifetime limit for Entrepreneur’s relief will be reduced from £10,000,000 to £1,000,000 with immediate effect.
- VAT will be reduced to zero from 1 December 2020 for e-publications and 1 January 2021 for women’s sanitary products.
- The maximum flat rate Income Tax deduction available to employees to cover additional household expenses will increase from £4 to £6 per week where they work at home under homeworking arrangements from 6 April 2020.
- Corporation tax rates will remain at 19% rather than falling to 17% from 1 April 2020 as announced in the 2018 Budget.
- It was confirmed that the new off-payroll working rules for workers in the private sector will come into force from April 2020.
A reminder of key changes announced previously
- The income tax personal allowance for 2020-21 will remain at £12,500 and the 40% threshold remain at be £50,000. For subsequent years, increases to the personal allowance and basic rate limit will be indexed with the CPI (The Consumer Price Index).
- From April 2020, where tax is due, a tax return and payment on account of tax will be due on the sale of residential properties by UK residents.
- The VAT registration threshold will be frozen at £85,000 until 31 March 2022 and its future will be reviewed once the terms of the EU exit are clear.
- The changes to interest deduction rules for landlords started in April 2017, and are still being phased in over a 4 year period. Relief for interest will be limited to basic rate tax.