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March 13, 2020

March 2020 Budget

Some have called it the Coronavirus budget, for others it was the Infrastructure budget. 

Either way it was a budget that was certainly high on spending commitments against a global back-drop of increasing Coronavirus concerns and stock-market volatility.

One key point is that there will be no changes to tax relief on pension contributions (for now) – contrary to rumours prior to yesterday’s speech by Rishi Sunak.

Here we have highlighted some of the key announcements that may impact you.

Pensions and savings

WhatThe Junior ISA allowance will rise from £4,368 to £9,000 per annum. The same limit will apply to Child Trust Funds (CTFs). The adult ISA allowance remains unchanged.
WhenFrom 6th April 2020.
CommentThere is a considerable increase in the amount that can be invested tax-efficiently for children – perhaps to help with further education costs, or helping them to get on the property ladder.
WhatThe lifetime allowance (LTA) will increase in line with CPI for next tax year, rising from £1,055,000 to £1,073,100.
WhenFrom 6th April 2020.
CommentThe LTA is the maximum amount that an individual can accrue in pension provision whilst retaining the tax benefits of doing so. It now increases each year in line with CPI (consumers price index) as a measure of inflation.
WhatAn increase in both pensions annual allowance taper thresholds by £90,000 each.

The minimum tapered annual allowance is decreased from £10,000 to £4,000.

WhenBenefits accrued on or after 6 April 2020.
CommentThe threshold income for high earners, after which their annual allowance is reduced, will be increased to £200,000. The annual allowance will only begin to taper down for individuals who also have an ‘adjusted income’ above £240,000 per annum.

Those with an adjusted income of £312,000 or more will now have a tapered annual allowance of £4,000 within the tax year.

Primarily, this is the government’s response to concerns from doctors and hospital consultants that they were penalised for working extra hours. The move will help reassure some doctors they can take on additional work without worrying about unexpected tax bills.

Personal taxation and allowances

WhatEntrepreneurs’ Relief reduced back to £1m from current £10m.
WhenThe measure will take effect for Entrepreneurs’ Relief qualifying disposals made on or after 11th March 2020.
CommentMany had expected Entrepreneurs’ Relief to be fully abolished but Sunak has stopped short of this. The relief gives business owners a lower capital gains tax (CGT) rate of 10% on the sale of businesses over their lifetime. The lifetime limit, upon which the 10% CGT rate is eligible, reduces from £10m to £1m. The standard rate of CGT is 20%.
WhatIncrease in National Insurance threshold for employees and the self-employed to £9,500.
WhenFrom April 2020.
CommentThis will save all workers earning more than £12,600 around £100 a year. Currently, employees pay 12% of their earnings in National Insurance contributions once they earn between £8,632 and £50,000 a year.

Business investment and taxation

WhatCorporation tax will remain at 19%.
WhenN/A.
CommentThe government had previously promised to reduce the level of corporation tax from 19% to 17%. The headline rate of 19% remains one of the lowest in the G20.
WhatChanges to off-payroll working rules (IR35) to go ahead.
WhenFrom 6th April 2020.
CommentMeasures already announced will come into force. The new legislation will affect contractors working through a Personal Service Company, recruitment agencies and with end clients who are either large or medium sized companies.

March 13, 2020