Rishi Sunak Announces His First Budget

13th March 2020 | Uncategorised

On the 11th March 2020, Chancellor Rishi Sunak delivered his first Budget to the House of Commons, announcing the government’s tax and spending plans for the year ahead. Headed by a £30 million investment to reduce the impact of the Coronavirus, further initiatives were announced to improve business practices, aid the environment and boost transport and infrastructure. These changes will be paid, at least in part, by a cut to Entrepreneurs’ Relief – although the government hasn’t stated whether it will scrap the relief completely. A lot was announced, and in our latest blog, we share the key points with you all. 

Public Services:

 

Business, Taxation, Pay & Pensions:

  • Firms eligible for small business rates relief will get £3,000 cash grant.
  • Entrepreneurs’ Relief will be retained, but lifetime allowance will be reduced from £10 million to £1 million. 
  • They’ll be an increase in public investment in R&D to £22 billion a year. An increase in the rate of Research & Development Expenditure Credit from 12% to 13% will also occur. 
  • The introduction of the PAYE cap on the payable tax credit in the SME research and development scheme will be delayed until 1 April 2021.
  • With effect from April 2020, the employment allowance will increase from £3,000 to £4,000. In contrast, access to the employment allowance will be restricted to employers whose national insurance contributions liability From 6 April 2020, threshold income will increase from £110,000 to £200,000. The adjusted income will increase from £150,000 to £240,000 and the minimum reduced tapered allowance will be decreased from £10,000 to £4,000.
  • The main rate of corporation tax will now remain at 19% from 1 April 2020, despite original plans to reduce this to 17%.
  • The tax threshold for National Insurance Contributions will rise from £8,632 to £9,500, taking 500,000 employees out of tax altogether.
  • Those earning more than £9,500 will be, on average, £85 a year better off.
  • The national living wage applicable to over-25s increases by 6.2% from £8.21 an hour to £8.72 an hour from April 2020
  • The lifetime allowance for pension savings increases for 2020/21 from £1,055,000 to £1,073,100.
  • 5% VAT on women’s sanitary products, known as the tampon tax, to be scrapped.
  • VAT on digital publications, including newspapers, e-books and academic journals to be reduced to 0% from December. 
  • Confirmation that the reverse charge VAT scheme for the construction industry previously due to be introduced from 1 October 2019 will take effective from October 2020.

Environment & Energy:

 

Transport & Housing:

  • More than £600 billion to be spent on roads, broadband, rail and housing by 2025.
  • £2.5 billion will be made available to fix potholes and resurface roads in England.
  • Stamp duty surcharge for foreign buyers of properties in England and Northern Ireland to be levied at 2% from April 2021.

 

What About The Impact On Businesses?

  • To help SMEs cope with absenteeism, the government has stated it will refund the cost of statutory sick pay in full for a total of 14 days. An SME, in this case constitutes a business with 250 or fewer team members.
  • Businesses can defer tax payments through an extension of Time to Pay, as well as apply for funds through the Business Interruption Loan Scheme, which will provide loans of up to £1.2 million to support SMEs during the Coronavirus outbreak. Participating banks will also receive 80% of their losses back.
  • For the 2020/21 tax year, business rates on retail and leisure businesses that have lower than £51,000 rateable value will be abolished.
  • To support the transition to low-emission vehicles, for cars registered on or after 20 April 2020 there will be reduction of 2% in 2020-21 for the company car tax benefit charge based upon the new measure.
  • From April 2021, companies that allow private use of zero-emission vans to their employees will apply a nil rate of tax within van benefit charges.

 

Is your business located in Manchester, Liverpool or the surrounding areas of Chester, Bolton, Stockport, Preston, or Warrington? For more information on how Budget 2020 could impact your business, and for guidance on tax, accountancy and advisory,  please don’t hesitate to contact us today at info@williamsoncroft.co.uk or on 0161 399 0121.

Williamson & Croft is a market leading accountancy, advisory and tax firm with particular specialisms in property, construction, retail, digital and creative, technology and professional services.

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