Budget 2020 Summary by PISCES
Below is a summary of the budget delivered by Rishi Sunak on the 11th of March 2020.
Taxes –
Entrepreneurs Relief will have the lifetime allowance reduced from £10million to £1million. There were rumours that it was going to be scrapped altogether before the budget.
Capital Gains Tax yearly exempt amount will increase to £12,300 for individuals and £6150 for Trustees.
Income Tax the tax-free allowance will remain the same at £12,500, National Insurance allowance will increase to £9500.
Corporation tax will remain at 19%.
A new Digital Services Tax will be introduced aimed at taxing multi-national corporations such as Facebook and Amazon. The first £25million of the company’s revenue will be exempt but amounts above that will be taxed at 2%.
Property -
A new 2% Stamp duty land tax will apply on purchases of residential properties in England and Ireland by non-resident individuals from the 1st of April 2021, this will be in addition to the normal rates of Stamp duty payable.
Private Residence Relief - the final period exemption that applies when a property is sold that is let but was previously the owner’s main residence will be reduced from 18 months to 9 months. There is an exemption that applies if the homeowner is moving into long term care or if the homeowner is occupying the home with the tenant.
Where capital gains tax is payable on the sale of a residential property the capital gains tax that is due now must be paid within 30 days of the sale or disposal of the property.
Allowances –
R & D Expenditure Credit (RDEC) is increased from 12% to 13%. This is significant since this allowance can be claimed by SME’s on Subsidised Expenditure, Sub-contracted R & D expenditure to them by a larger company and capped R & D expenditure.
A consultation is to be launched to investigate if costs of data and cloud computing should be eligible for inclusion in the R & D tax credit claim by a company.
Pension Taper Relief – If you make pension contributions of more than £40000 per year you are subject to a tax charge on that amount. The exception to this rule are high earners who have this amount reduced to a minimum of £10,000 per year. From 6th of April 2020 there will be increases in the thresholds where this happens. Income will be increased from £110,000 to £200,000 and adjusted income including the pension contribution increased from £150,000 to £240,000. This will have the effect of removing this charge for Doctors and NHS Senior Consultants.
The flat rate allowance that employees can claim for working from home will be increased from £4 per week to £6 per week.
Electric, Zero Emission and Low Emission Cars will be subject to new P11d rates. These will be 0% for the tax year 2020/21, 1% for the tax year 2021/22 and 2% for the tax year 2222/23.
Coronavirus –
The Off-payroll regulations affecting people working through their Personal Service Company’s was initially confirmed to be going ahead. This was later withdrawn, and a delay has been introduced to the legislation until April 2021 this is due to the Coronavirus.
SSP will be payable form the first day of sickness if due to the Coronavirus. Business with less than 250 employees will be refunded the cost of SSP due to the Coronavirus.
Self-employed workers not eligible for SSP will be able to claim Employment Support Allowance if they are off work.
Small firms will be able to access business interruptions loans of up to £1.2million.
Business Rates will be abolished for businesses in the retail, leisure and hospitality sectors with a rateable value of less than £51,000.