Your 2020 Budget summary
Please click here for a link to our summary of the key announcements in the Budget 2020 statement, made on Wednesday 11 March. A link to download our latest tax tables can be found below.
The newly appointed Chancellor, Rishi Sunak, announced a Budget with a repeated emphasis on ‘getting things done’, echoing the recent election campaign.
His initial focus was on short-term measures designed to deal with potential challenges the UK faces as a result of the coronavirus. These amounted to a £12bn fiscal stimulus, with more available if required. There was help for both businesses and individuals.
For the coming year, statutory sick pay will be available to more people and so will some other social security benefits. Business Rates will be reduced or even eliminated for some smaller businesses – at least in the short term. Other immediate support initiatives for smaller businesses include greater access to bank lending, as well as enhancements to the HMRC ‘Time to Pay’ service.
The Chancellor is due to announce another Budget in the Autumn and so there were several consultations about possible future tax changes, including new proposals on the treatment of fund management companies, pension tax administration, and aspects of research and development tax credits.
Some of the other key points announced yesterday were:
- Changes to the taper of the pension annual allowances (which determine the maximum contribution you can receive tax relief on) will mean fewer higher paid people will be hit by a reduced annual allowance.
- This is a complicated area of planning but essentially, from next tax year, only those with both a ‘threshold income’ of over £200,000 and ‘adjusted income’ of over £240,000 will have their annual allowance reduced, from the standard level of £40,000, by £1 for every £2 of income.
- The fully tapered annual allowance will also reduce from £10,000 to £4,000, so if your income is over £312,000 you will be restricted to pension contributions of £4,000 per annum. If you think you may be affected, we will of course be happy to help.
- Entrepreneurs’ relief has been reduced from £10m to £1 million of gain with immediate effect.
- The annual limit for Junior ISA contributions will double to £9,000 from next tax year.
- There will be an increase in the National Insurance Contribution (NIC) employment allowance to £4,000 which will benefit smaller businesses.
- The NIC threshold for individuals will go up from £8,632 to £9,500 from next tax year.
- From April 2021, only electric and other zero-emission cars will qualify for first year allowances and cars with emissions over 50 g/km will qualify for writing down allowances of just 6% a year.
If you have any questions about the summary’s contents or how any aspects of your tax and financial planning may be affected by the Budget, please call us to discuss them.