The 2020 Spring Budget was presented by UK’s new Chancellor of the Exchequer, Rishi Sunak, on 11th March 2020. Below are some of the more pertinent highlights and how they will impact you. The highlights below are relevant to UK-resident businesses and individuals. For those in the Isle of Man, refer to the article at the following link: https://www.invicta-accounting.com/blog-post/the-2020-21-isle-of-man-budget/.
The coronavirus outbreak dominated the budget as the government is putting measures in place to support businesses and individuals affected. Some of the measures that include the following:
- Statutory sick pay (SSP) will be extended to those infected individuals who have self-isolated, or those who have chosen to stay home to care for those infected. This however does not apply to self-employed contractors or low-income earners (you must earn at least £118 per week to be eligible). Note that SSP is payable by your employer.
- Eligible small businesses that incur SSP costs will be refunded by the government, with loan options being offered if losses are incurred due to lack of staff as a direct result of the virus.
- Business rates will be NIL for the 2020-21 tax year for businesses in the retail, leisure and hospitality industries that have rateable value of £51,000 or less.
The Chancellor has promised £30 billion extra spending mainly to the NHS to tackle the crisis.
Personal income tax rates and bands
These have remained unchanged for the next tax year. The annual personal allowance is still £12,500. Any annual earnings above £12,500 are taxed as per the table below:
National Insurance Contributions (NIC)
The Employee NIC threshold has been increased from £8,632 to £9,500 as from 6th April 2020. This means that as from the next tax year, if your total annual earnings are less than £9,500, you do not have to pay NIC.
The Employer NIC threshold will increase from £8,632 to £8,788 as from 6th April 2020.
Basic state pension
This applies to men born before 6th April 1951 and women born before 6th April 1953.
The basic state pension you receive from the government will increase from £129.20 per week to £134.25 per week as from 6th April 2020. You must have been paying NIC for a total of 30 years in order to qualify for a full basic state pension.
New state pension
This applies to men born after 6th April 1951 and women born after 6th April 1953, who have reached the state pension age (65 to 68 years of age depending on your gender and date of birth).
The new state pension will increase from £168.20 per week to £175.20 per week as from 6th April 2020. You must have been paying NIC for a total of 10 years in order to qualify.
The standard pension annual allowance still remains at £40,000. This is the maximum amount of pension that an individual can contribute to a pension scheme whilst still receiving a pension tax relief. However, the income threshold that affects what is referred to as “tapered” pension annual allowance has been increased from £110,000 to £200,000. Please contact us for further guidance in this regard.
The pension lifetime allowance will increase from £1,055,000 to £1,073,100 as from 6th April 2020.
Non-UK resident property buyers – additional stamp duty surcharge
As from 6th April 2020, non-UK tax residents (this includes Manx tax residents) buying property in England and Northern Island will have to pay an additional 2% stamp duty surcharge over and above any stamp duty that is ordinarily chargeable on purchase of UK property. This was introduced in an effort to control the UK property prices as the government gathered some evidence of prices being pushed up as a result of purchases by non-UK residents.
Chancellor confirmed that the IR35 rules for off-payroll workers will go ahead on 6th April 2020. This also means that the onus on whether a worker falls under IR35 now lies with the end-client companies rather than the individuals or contractors.
The lifetime limit for entrepreneurial relief has been reduced from £10 million to £1 million as from 6th April 2020. Therefore, when you sell shares and you claim entrepreneurial relief (i.e. claim to pay only 10% capital gains tax rather than 20%), the maximum claims of relief you can make during your lifetime is now limited to a much lower £1 million.
What can Invicta do for you?
In addition to our standard schedule of services regarding tax administration, tax return preparations and submissions, Invicta can assist you and your business in assessing how the above changes have impacted you. We are qualified and experienced accountants with a deep understanding of the tax legislation, and we keep a close eye on any tax changes introduced to ensure you remain compliant with regulation, whilst still meeting your business objectives and minimizing any costs or losses.
Call Invicta Accounting on 01624 672358 or emails us at firstname.lastname@example.org for more information.