Updated: Mar 16, 2020
Coronavirus was a key element of this year's budget with £30bn being put aside to help fund the nation through its potential impact. There is a HMRC helpline available to businesses and self-employed people who are struggling to pay taxes as a direct result of the pandemic. More of that here. There will be a set of measures to support the UK through the coronavirus crisis with business rate relief, time to pay tax deferrals and underwriting the cost of statutory sick pay for smaller businesses.
The van benefit charge and the car and van fuel benefit charges will rise in line with the Consumer Price Index (CPI) from 6 April 2020. The flat-rate van benefit charge will increase to £3,490 and the flat-rate van fuel benefit charge will increase to £666.
The lifetime limit on CGT Entrepreneur's Relief is reduced from £10m to £1m for qualifying disposals made after 11 March 2020 - with special provisions for disposals entered into before this time.
The maximum Employment Allowance for NI that may be claimed by eligible employers will rise by £1,000 to £4,000 from April 2020.
Businesses that incur qualifying expenditure on the construction, renovation or conversion of non-residential structures and buildings may claim Structures and Buildings Allowances (SBA). From 1 April 2020 for corporation tax and 6 April 2020 for income tax, businesses may claim an increased annual allowance of 3%.
The corporation tax (CT) main rate is set at 19% for the financial year beginning 1 April 2020. This maintains the rate at 19% rather than reducing it to 17% from 1 April 2020.
Enhanced Capital Allowances will give 100% relief on zero emission cars and gas refuelling stations - extended by 4 years until April 2025.
The government has already announced the Business Rates retail discount will be increased to 50% in 2020-21. And to support small businesses affected by COVID-19 they’re increasing it further to 100%, with the relief also being extended to the leisure and hospitality sectors.
Individuals and self-employed
The personal tax allowance will remain at £12,500 for 2020/21.
The Class 1 National Insurance Contributions (NIC) primary threshold will rise to £9,500 from April 2020.
IR35: The new rules around off-payroll workers in the private sector are confirmed to apply from 6 April 2020. The draft legislation (and HMRC guidance) will be finalised in the Finance Bill 2020, which will be published on 19 March 2020.
The capital gains tax (CGT) annual exempt amount for 2020/21 will rise from £12,000 to £12,300 for individuals and personal representatives, and from £6,000 to £6,150 for trustees of settlements.
There will be a future consultation on pension tax administration. Those earning around or below the level of the personal allowance and saving into a pension may benefit from a top-up on their pension savings equivalent to the basic rate of tax, even if they pay no tax. Whether they receive this top-up will depend on how their pension scheme administers tax relief.
Pensions: As predicted, the Chancellor hasn’t scrapped the tapered annual allowance rules, but he has made some changes:
From 6 April 2020, there will be an increase to the income levels triggering the tapering of the pensions annual allowance. The adjusted income level will increase from £150,000 to £240,000.
Where total income exceeds £240,000, the pensions annual allowance of £40,000 is reduced by £1 for every £2 of income above that level.
The Chancellor opened by addressing current coronavirus Covid-19 concerns. He said that there is likely to be a temporary disruption to the economy, but the government will do whatever it takes to support it. On the supply side, the government anticipates that up to a fifth of the working age population could need to be off work at any one time. Business supply chains are currently being disrupted around the globe. The combination of these factors will mean that for a period, UK productive capacity will shrink. There will also be an impact on the demand side of the economy, through a reduction in consumer spending.
Although the personal tax allowance will remain at its current level of £12,500 for 2020/21, the National Insurance Contributions (NICs) primary threshold will rise to £9,500 in April 2020. The government intends that by 2024, the National Living Wage will reach two-thirds of median earnings. On current forecasts, that means a living wage of over £10.50 an hour, but this is to be examined in further detail by the independent Low Pay Commission.
The Chancellor set out several measures designed specifically to help businesses, including enhancements to certain capital allowances and research and development rules.
Green issues also featured heavily in the Budget speech. Privately owned boats and yachts will have to use white diesel instead of the cheaper red diesel in their tanks to curb pollution; there will be further consultation on the proposed plastic packaging tax which will apply a rate of £200 per tonne of plastic packaging which does not contain at least 30% recycled plastic; and the climate change levy on electricity will be frozen from April 2022, and increased on gas. There will be substantial investments in tackling nitrogen dioxide emissions in towns and cities across England, and further support for the rollout of new rapid charging hubs, so that drivers are never more than 30 miles away from charging points.
It is important that you talk to us if you need clarity around how this year's Budget announcements might affect you.