Updated 4 May 2020

If you are short of time but want a quick overview of the implications from the Chancellor's Budget on 11 March 2020, our specialist team have compiled a list of the key takeaways.  For more detail, visit our comprehensive overview , download our 2020 Budget Summary pdf Guide or contact one of the team.

Pensions, Savings and Investments

For pension contributions the taper thresholds are to be increased by £90,000. From 2020/21, for ‘threshold income’ it will be £200,000, and for ‘adjusted income’ £240,000. This will help many, such as medical consultants, who have faced large tax bills on extra pay. However, from 2020/21 the annual allowance of £40,000 is tapered by £1 for every £2 the adjusted income exceeds the threshold, to a minimum of £4,000 (previously £10,000).

Top-slicing relief on life policy gains is to be clarified, reflecting the taxpayer’s successful Tribunal decision, for gains arising from 11 March 2020.

National Insurance

The annual threshold for employees’ and self-employed National Insurance contributions is raised to £9,500 from April 2020.

Businesses

• Corporation tax rate remains at 19%
• Structures & Buildings Allowance is increased from 2% to 3% from April 2020.
• The employment allowance is increased from £3,000 to £4,000 from April 2020.
• Research & Development Expenditure credit increased from 12% to 13% from April 2020.
• The introduction of a PAYE cap on R & D payable tax credit for SMEs is to be delayed until April 2021.
• The relief to companies for intangible fixed assets is to be reformed; so that tax relief for the cost of acquiring such assets from July 2020 will be under a single regime, removing the pre-2002 exclusion ‘subject to restrictions to prevent tax avoidance’.
• Red diesel, which carries about 47p per litre less duty, is to be available from April 2022 only for agriculture, rail transport and non-commercial heating. Ferries and fishing boats will retain their Marine Voyages Relief, so that their costs don’t increase.
• The new digital services tax will apply from April 2020; to be repealed ‘once an appropriate global solution is in place’.
• A new Plastic Packaging Tax will apply from April 2022 to incentivise the use of recycled plastic. The tax will be £200 per tonne of plastic packaging that contains less than 30% recycled plastic.

Coronavirus support for Businesses

Business rates – Recognising the potential effect on the economy of the coronavirus outbreak, there are substantial reductions. The retail discount is increased to 100% for 2020/21 and extended to leisure and hospitality sectors.

Those employers with fewer than 250 staff will be able to reclaim 100% employees’ first two weeks’ statutory sick pay resulting from COVID-19 (coronavirus).

A new £1.2bn business interruption loans fund for small businesses.  Banks will provide these loans (of up to £1.2m per eligible business), with an 80% Government guarantee backing the loans to deliver working capital.

Capital Taxes

Entrepreneurs’ relief – the lifetime limit is cut from £10 million to £1 million with effect from 11 March 2020. There was no reference to Investors’ Relief, which is also at 10% on a lifetime limit of £10 million.

VAT

• The electronic publications to be zero-rated from 1 May 2020 (this was brought forward from 1 December in response to the coronavirus – see here)
• The Tampon tax (5%) ends 31 December 2020. It is not clear if the equivalent donation currently made to women’s’ charities will continue.

Property

• An additional 2% stamp duty land tax (SDLT) will be payable by non-residents on purchases of residential property in England and Northern Ireland from 1 January 2021.
• The Stamp Duty Land Tax rates for residential and non-residential property in England and Northern Ireland remain frozen

Frozen duties

• Road fuel duties are to remain frozen.
• Duties on spirits, wine, beer and cider are to be frozen.

Inheritance Tax

The Chancellor made no reference to implementing the changes to inheritance tax recommended by the Office of Tax Simplification.

For further information and advice, please talk to your usual Shipleys' contact or call one of our offices

London: t +44 (0)7312 0000  e: advice@shipleys.com

Godalming: +44 (0) 1483 423607  e: godalming@shipleys.com

This Budget Summary is based on the Chancellor’s Budget Statement on 11 March 2020, supplemented by information from official publications.

It reflects our understanding of proposed changes to tax law and practice at the date of publication, but is not a complete and definitive guide. The Budget proposals may be amended before the Finance Bill becomes law.

Specific advice should therefore be obtained before taking action, or refraining from taking action, on the basis of this information.

© 2020 Shipleys LLP