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Spring Budget 2020 – A budget that ‘gets things done’!
Rishi Sunak has delivered his first Budget as Chancellor of the Exchequer, the first Budget of the decade and the first Budget outside the European Union. For anyone watching it was clear that the focus was on ‘getting things done’.
The initial measures concentrated on the disruption caused by Coronavirus and Mr Sunak promised that resources, as are required, will be available to the NHS. He announced swift and decisive action to help the economy cope: providing a raft of measures to help both individuals and small businesses affected. Vital support for cashflow and liquidity will be provided for small businesses by covering Statutory Sick Pay and providing loans and Business Rate cuts.
Whilst a hit to the economy would appear to be inevitable, he stressed it would be temporary and that all measures would be put in place to ensure that the economy continues to grow once the pandemic passes.
The Budget focus then shifted to addressing some of the pledges made by the Conservatives in their election campaign and set out plans for the future.
There had been much speculation that there could be major changes to capital taxes, such as the reform of Inheritance Tax and the abolition of Entrepreneurs’ Relief for Capital Gains Tax. There was no mention of Inheritance Tax in this Budget so current planning opportunities and reliefs will continue to apply. However, we would not rule out change in the future given the comprehensive review published by the Office of Tax Simplification last year.
With regards to Entrepreneurs’ Relief the Chancellor chose to reform rather than abolish and has reduced the lifetime limit of eligible gains from £10 million to £1 million. Entrepreneurs’ Relief will remain a vital relief for those considering retirement or the succession of their business. Advice should always be sought to ensure you qualify, as the rules have become increasingly complex since the relief was originally introduced.
Higher rate tax relief on pensions, also speculated to change, remains intact. Conversely the thresholds at which the annual allowance is reduced have actually increased which will be welcomed by many high earners, the rationale being that current rules were discouraging Doctors from working more hours.
Investment in infrastructure, schools, further education and housing was evident throughout the speech in addition to substantial investment in Research & Development. This eye-watering spending plan has little detail on how it is to be funded.
Substantial reforms to the personal tax system would appear to have been put on hold for now, but the lower earnings limit for National Insurance has been raised which will deliver a small increase in net pay for most workers. With few significant tax raising measures announced, tougher tax decisions may be likely in the Autumn.
As always the content of the speech is the tip of the iceberg with many more announcements contained in the press releases that followed.
Our experts have been busy dissecting all the information from the Chancellor’s announcements and creating useful, jargon free summaries so you can understand how the Budget affects you and your business.
Business and Corporation Tax
Business Rates Reliefs
Small business grant funding
Time to Pay
Coronavirus Business Interruption Loan Scheme
British Business Bank’s Start-Up Loans Program
Enhanced Capital Allowances in Enterprise Zones
Research & Development Expenditure Credit
Corporation Tax Rate
If you have any queries regarding your business, and how the changes announced in the budget may affect you, please contact one of our Tax Specialists on 01228 711888.
Capital Gains Tax (CGT) and Entrepreneurs’ Relief
Planning should be undertaken before disposing of any assets to ensure that the annual exemption and any other available reliefs are taken advantage of. Please contact a member of our Tax team on 01228 711888 if you have any queries or are thinking of making a disposal.
Inheritance Tax (IHT)
In the weeks leading up to the Budget there was much speculation around reforms to IHT, in particular Business Property Relief (BPR) and Agricultural Property Relief (APR). However, the Chancellor focused on other things in his Budget and did not make any changes to current legislation. It is likely he has saved any IHT reforms for a later date.
Inheritance Tax is a complex subject, however with careful planning your exposure can be minimised. If you would like to review your IHT position, please do not hesitate to contact one of our Tax Specialists on 01228 711888.
National Insurance (NIC)
From April 2020 the National Minimum Wage rates are:
employees aged 25 and over: £8.72
employees aged between 21-24: £8.20
employees aged between 16-17: £4.55
employees aged between 18-20: £6.45
apprentices up to age 19 or in their first year of apprenticeship: £4.15
(unless rates specified in apprentice training contract
If you have any questions on payroll matters our specialists are on hand to help, give them a call on 01228 711888.
Personal Income Tax
If you have any Income Tax queries, please contact one of our Tax Specialists on 01228 711888.
Savings & Investments
David Allen Financial Services, as an independent financial adviser, can help you make the most of your savings and investments as well as ensuring your retirement planning makes the most of the tax advantages available. We can also help you plan for a home purchase or remortgage via our Mortgage and Protection Advice Team.
For an initial discussion to see how we can help, please contact one of our team on 01228 711 881.
Tax Credits & Benefits (Universal Credits)
Temporary measures are to be introduced to help those who need to be off work due to the Coronavirus, these include:
Some additional changes which were announced to support the most vulnerable:
If you have any queries regarding your Tax Credit or Universal Credit claim please contact one of our Tax Specialists on 01228 711888.
VAT & Duties
For more details on what was announced in the 2020 Budget in relation to VAT and other duties, please contact Julie Osborn on 01228 711888.
Miscellaneous announcements
A few other items were announced which may be of interest.
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