Increasing National Insurance thresholds. The Budget confirms the government’s commitment to increase the thresholds at which employees and the self-employed start paying National Insurance contributions (NICs) to £9,500 from April 2020.
Increasing the flat rate deduction for homeworking – The government will increase the maximum flat rate income tax deduction available to employees to cover additional household expenses from £4 per week to £6 per week, where they work at home under homeworking arrangements. This will take effect from April 2020.
Business Tax – Employer NICs
Increasing the Employment Allowance – The government will increase the Employment Allowance from £3,000 to £4,000 from April 2020.
Capital Gains Tax: Reduction in the Entrepreneurs’ Relief lifetime limit
From 11 March 2020, the lifetime limit on gains eligible for Entrepreneurs’ Relief (which offers a reduced 10% rate of Capital Gains Tax on qualifying disposals) will be reduced from £10 million to £1 million.
Corporation Tax (CT) rate – The government will legislate to retain the current 19% rate in April 2020.
Transport Taxes – Company car tax (CCT): Rates
As set out in July 2019, the government will reduce most CCT rates by 2% in 2020-21 for cars first registered from 6 April 2020. Rates will return to planned levels over the following two years, increasing by 1% in 2021-22 and 1% in 2022-23. Rates will then be frozen until 2024-25.
Van benefit charge nil-rating for zero emission vans – From April 2021, the government will apply a nil rate of tax to zero emission vans within van benefit charge. This measure will save businesses an estimated £433 per van in tax in 2021-22.
Tax Avoidance, Evasion & Compliance – Tackling Construction Industry Scheme (CIS) abuse
The government will legislate to prevent non-compliant businesses from using the CIS to claim tax refunds to which they are not entitled. The government is also publishing a consultation which introduces options on how to promote supply chain due diligence.
CIS: Construction Industry VAT reverse charge starts 1st October 2020.
Full report to follow June 2020.
Conditionality: Hidden economy – The government will legislate in Finance Bill 2020-21 to make the renewal of licenses to drive taxis and private hire vehicles (PHVs, e.g. minicabs), operate PHV firms, and deal in scrap metal conditional on applicants completing checks that confirm they are appropriately registered for tax. This measure will make it more difficult for noncompliant traders to operate in the hidden economy and help level the playing field for the compliant majority.
Capital Gains Tax – From the 6th April 2020, there are three significant changes to capital gains tax: reduction in the final period of exemption, end of lettings relief, and a 30-day window.
The final period of exemption relief can be applied to a property up for sale, provided the property is sold within 18 months of the owners moving out. The final period of exemption will be reduced to 9 months on 6th April 2020, and it will increase the capital gains tax liability.
From April 2020, anyone making a taxable gain from selling a UK residential property must submit a residential property capital gains return within the 30-day window and pay any capital gains tax owed.
Off-Payroll in the Private Sector IR35 – IR35 in the private sector – now referred to as off-payroll working in the private sector – is changing from April 2021. Similarly, to off payroll in the public sector, any medium or large private sector businesses hiring contractors or freelancers will be responsible for determining the IR35 status of their workers.
National Living Wage – From April 2020, the new rates are:
The National Living Wage for ages 25 and above – up 6.2% to £8.72 The National Minimum Wage for 21 to 24-year-olds – up 6.5% to £8.20 For 18 to 20-year-olds – up 4.9% to £6.45 For under-18s – up 4.6% to £4.55 For apprentices – up 6.4% to £4.15