Budget 2020

Chancellor Rishi Sunak delivered his first budget speech on 11 March, and with the coronavirus high on the agenda there were emergency measures aimed at helping businesses and protecting jobs.

Personal Taxes

The tax-free personal allowance will remain at £12,500 for the 2020/21 tax year throughout the UK.
The basic-rate band in England, Northern Ireland and Wales will stay at £37,500 and consequently, the higher-rate threshold will continue to be £50,000.
The additional-rate band in those nations will also remain at £150,000.

National Insurance Contributions

The threshold for class 1 primary contributions paid by employees and the class 4 national insurance contributions (NICs) paid by the self-employed will increase from £8,632 to £9,500 for 2020/21.
From April 2021 employers will pay no secondary class 1 NICs in relation to veterans they employ that have left regular service.
This payment holiday will last for one year from the employment commencement date.
The class 2 NICs rate for the self-employed will increase from £3.00 per week to £3.05 per week from April 2020. Class 2 NIC is payable by 31 January following the end of the tax year

Capital Gains Tax

From 6 April 2020, the annual exempt amount for individuals and personal representatives will increase from £12,000 to £12,300. For trustees of settlements, the annual exempt amount will increase from £6,000 to £6,150

UK residents who sell a residential property in the UK on or after 6 April 2020 may have to report the gain and pay any capital gains tax owed to HMRC within 30 days of completion.

Letting Relief

From April 2020, letting relief will only be available in circumstances where the owner of the property is in shared occupancy with the tenant.

Private Residence Relief

In most cases, the final-period of exemption will fall from 18 months to nine months from April 2020.

The residence nil-rate band for inheritance tax increases from £150,000 to £175,000 from 6 April 2020.


Corporation Tax

The main rate of corporation tax will now remain at 19% from 1 April 2020, despite original plans to reduce this to 17%.  Additionally, it was announced that the main rate of corporation tax will be set at 19% for the financial year beginning 1 April 2021.

Employment Allowance

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 in the previous tax year was less than £100,000

Capital Allowances

The availability of first year capital allowances of 100% for zero-emission cars (as opposed to those cars not exceeding 50 g/km), zero-emission goods vehicles or equipment for gas refuelling stations for use in the business will be extended from April 2021 to April 2025.
The main writing-down allowance of 18% will only apply to cars with emissions of up 50g/km.
The special rate writing-down allowance of 6% will apply to cars with emissions above 50g/km. This is a reduction from the existing threshold of 110g/km.
The new 50g/km threshold will also apply for determining the lease rental restriction for the costs of hiring business vehicles for more than 45 consecutive days.

Business Rates

It had already been announced that from 1 April 2020, for one year, the business rates retail discount for properties with a rateable value below £51,000 in England would increase from one third to 50% and would be expanded to include cinemas and music venues.

In response to COVID-19, the retail discount will be increased to 100% and expanded to include hospitality and leisure businesses.

There will be an increase from £1,000 to £5,000 business rates discount for pubs in England with a rateable value below £100,000 for one year from April 2020.

The £1,500 business rates discount for office space used by local newspapers in England will be extended for a further five years until 31 March 2025.

A cash grant of £3000 will be available for businesses with a rateable value of less than £15,000

Entrepreneurs Relief

The lifetime limit on qualifying disposals eligible for the 10% tax rate is reduced from £10m to £1m for disposals made on or after 11 March 2020.
Any entrepreneurs’ relief claimed on previous qualifying gains must be taken into account when establishing the extent of the lifetime limit still available.
There are special provisions for disposals entered into before 11 March 2020. In such cases, the disposal would be subject to the £1m cap, unless it can be demonstrated that the contract was not entered into to obtain a tax advantage and, where the parties are connected, the contract must have been entered into for wholly commercial reasons.