The 2020 March budget has all but been forgotten amidst the current Covid-19 pandemic. The following is our summary of the key points which will affect our clients.
Income Tax Allowances
Are frozen at 2019/20 levels.
National Insurance Tax Thresholds
The tax-free threshold is increased by 10%! Good news for many small businesses who pay up to the threshold.
Capital Gains Taxes
The tax-free allowance rises with inflation to £12,300.
CGT on chargeable residential property will have to be paid within 30 days of completion.
The planned reduction to 17% corporation tax has been shelved.
There has been a technical change in the taxation whereby larger gains will not affect the personal allowance.
Annual Allowance Tax On Pensions
Who says blackmail doesn’t pay? The government have caved into the doctors and have increased both the annual threshold and adjusted earnings benchmarks by £90,000. Only those with remuneration packages exceeding £240,000 pa will suffer from the taper, with the minimum annual savings dropping to £4,000 for those with relevant earnings above £312,000.
Adult ISA allowances remain the same but Junior ISAs have more than doubled to £9,000 pa.
Entrepreneurs Relief Slashed
The £10 million limit is dropped to £1 million per person. This reflects the previous relief being an exclusive benefit to the ultra rich.
National Living Wage
This increases by 6.2% to £8.72 with an aim to get it above £10.50 by 2024. Whilst it is churlish to suggest that anyone should work for £8.72 an hour, the reality is that many industries base their incomes on the minimum wage. This means that many more people benefit than you would have first thought. Wages are the major expense for nursing homes so expect residential and nursing home fees to rise well above inflation.
Time To Pay Taxes
A useful one for next January. As part of the Covid-19 provisions, there will be facilities for HMRC to allow late tax payments. Even the July 2020 payment on account has been deferred to January 2021.
There were significant pledges on infrastructure spending which will certainly be needed post Covid-19, though these could call into question the government’s commitment to fiscal control. Overall, the pensions concessions will be very popular with the doctors and higher earners and that is about it!