Budget Report 2020

The 2020 Budget Report was delivered on Wednesday 11th March by Rishi Sunak.

The headlines in the media include the government’s plans to provide unlimited financial support to the NHS in light of the coronavirus, the Environment Agency will receive an increase in funding for flood defence and there were pledges in relation to infrastructure and green priorities.

These high-level announcements are positive for the UK as a whole, but what did the budget deliver for you as a taxpayer:

  • If you run a business
  • If you are a limited company
  • If you are an employer
  • If you are an employee
  • If you are self-employed (sole trader / partnership)
  • If you are a landlord

We cover each of these areas in this special a4c 2020 budget blog…


If you run a business

Expanded Business Rates relief will be increased to 100% in 2020/21 for most small businesses.

A dedicated helpline for those who need a deferral period on their tax liabilities (time to pay arrangement) will be manned by 2000 HMRC staff.

HMRC will also waive late payment penalties and interest where a business experiences administrative difficulties contacting HMRC or paying taxes due to COVID-19. 

If you are a limited company

Corporation tax will remain at 19%, the lowest in the G7 and G20.

Entrepreneurs Relief is being reformed but not scrapped, as many had feared leading up to the budget.  The government will reduce the lifetime limit on gains eligible for relief to £1 million from £10 million.  The reduced 10% rate of Capital Gains Tax on qualifying disposals remains in place. 

The review of the off-payroll working rules (IR35) has been concluded and the planned reforms will be implemented on 6th April 2020, as previously announced.

The government will reduce most company car tax rates by 2% in 2020-21 for cars first registered from 6 April 2020.

If you are an employer

The Employment Allowance for Employer National Insurance Contributions is increasing from £3,000 to £4,000, an average gain of £850 per year. (Note this won’t apply if you are the sole director / employee).

The government will support small and medium-sized businesses and employers to cope with the extra costs of paying COVID-19 related Statutory Sick Pay (SSP) by refunding eligible costs (limited to two weeks per employee).

If you are an employee

The COVID-19 response fund will temporarily extend Statutory Sick Pay (SSP) for those advised to self-isolate, and those caring for others who self-isolate, to be paid from the first day of sickness absence, rather than the fourth day.

The National Insurance Contribution thresholds will be increased from £8,632 to £9,500, saving a typical employee around £104 a year from April.

The National Living Wage will increase from £8.21 to £8.72 in April 2020 and is expected to be over £10.50 in 2024.

The government will increase the home-working flat rate allowance, available to employees to cover additional household expenses, from £4 per week to £6 per week.  This will take effect from April 2020.

If you are self-employed (sole trader / partnership)

The National Insurance Contribution Lower Profits Limit will be increased from £8,632 to £9,500, saving a typical self-employed person around £78 a year from April.

The government will explore how to improve the guidance available for self-employed people applying for a mortgage.

The government will consider how to provide appropriate support to self-employed parents so that they can continue to run their businesses, as part of its wider review of Parental Pay and Leave.

To make it easier for self-employed people to navigate the tax system, the government will launch new interactive online guidance for taxpayers with non-Pay As You Earn income this summer.

If you are a landlord

No changes to the removal of finance relief on mortgage interest payments.

Other key points

Fuel duty will be frozen for the tenth consecutive year.

A freeze in duty rates for beer, cider and spirits.

Tampon Tax – the 5% rate of VAT on women’s sanitary products – will be scrapped from 1 January 2021.

The Budget also announced substantial green policies to reduce emissions, ensure our environment is protected and resilient to climate change, and generate green economic opportunities across the UK.

Reference

For the full Budget Report 2020 visit https://www.gov.uk/government/publications/budget-2020-documents/budget-2020

Or to discuss how the Budget Report 2020 will impact you and your business give us a call on 01737 652 852.