Chancellor Rishi Sunak presented his 2020 Budget on Wednesday 11th March. We have summarised the top headlines business owners and employees need to be aware of:
Corporation tax: The main rate of corporation tax will remain at 19% for 2020/21
Employment Allowance: Employer National Insurance Contributions is increasing from £3,000 to £4,000. Helping with the reduction to costs of employment.
Structures and Buildings Allowance: Increased from 2% to 3% per year from April 2020. It came into effect on 29 October 2018 and allows those making capital investments in non-residential structures and buildings to obtain tax relief against costs which would not otherwise qualify for capital allowances.
Start-Up Loans: £28m package and up to 10,000 Loans to support entrepreneurs and businesses to start.
Car Capital Allowances: Extended until April 2025 of the 100% first year capital allowance for businesses incurring expenditure on low-emission cars, zero emission goods vehicles and equipment for gas refuelling stations. Also a reduction of the emissions threshold for WDA to 50g/km, from 110g/km.
R&D tax credit regime: Increasing to 13% from 12% for expenditure incurred after 1 April 2020.
Non-UK resident property owners: If receiving rental income from the letting of UK property, they will be subject to UK corporation tax from April 2020.
Entrepreneurs’ Relief: The Chancellor decided to retain it, although with a reduction in the lifetime limit to £1m from the current £10m.
VAT on digital publications: VAT is not due on digital newspapers and will extend relief to all digital publications from December this year.
Intangible fixed assets: From 1 July 2020, companies will be able to claim corporation tax relief for pre 2002 intangible assets acquired from related parties. Companies can now claim relief for older, well-established intellectual property rights.
Statutory sick pay: Temporarily allow statutory sick pay (SSP) to be paid from the first day of sickness absence, rather than the fourth day, for people who have coronavirus or who have to self-isolate as per Government guidelines. Also a temporary extension to cover individuals who are unable to work because they have been advised to self-isolate, and people caring for those within the same household who display coronavirus symptoms and have been told to self-isolate.
Employers with fewer than 250 employees as of 28 February 2020 will be eligible for a refund of eligible SSP costs relating to coronavirus. This will be limited to two weeks per employee.
Use of home allowance: the maximum income tax deduction available to employees to cover additional household expenses will increase from £4 to £6 per week.
Personal allowance: Remains at £12,500 and the basic rate limit at £37,500. Indeed, all income tax rates and allowances remain the same as for 2019/20
Employee National Insurance thresholds: Increased from £8,632 to £9,500, saving a typical employee around £104 a year.
The National Living Wage: Increase from £8.21 to £8.72.
Capital gains tax: Annual exempt amount has increased from £12,000 to £12,300.
NIC Class 1 primary threshold: Increased to £183 per week, equivalent to £9,500 per year. The Class 4 lower profits limit is similarly increased to £9,500. There is no change to the Class 1 upper limit or Class 4 upper profits limit.
Pension: The annual allowance remains unchanged at £40,000.
Individual Savings Account (ISA): Annual contribution limit unchanged at £20,000 for 2020/21. However, the limit for a Junior ISA is now £9,000 (currently £4,368).
For more information on the budget or any of the points above, please contact AEL Markhams and we will be happy to advise.