Company tax rate frozen at 19%
As previously announced the corporation tax rate is to remain at 19% for the time being. It was scheduled to reduce to 17% from 1 April 2020.
20th March 2020
As previously announced the corporation tax rate is to remain at 19% for the time being. It was scheduled to reduce to 17% from 1 April 2020.
There were many rumours in the run up to the Budget that Capital gains tax entrepreneurs’ relief that allows certain business owners to pay just 10% tax on disposal would be abolished. Rather than abolish the relief the Chancellor has announced that from 11 March 2020 onwards the relief will only be available against the first £1 million of lifetime gains instead of the previous £10 million limit.
Many State Benefits have been frozen, or increases limited, for a number of years. The Government have however decided to increase many State Benefits from 2020/21 including Child Benefit. The amount payable in respect of the oldest child has been increased to £21.05 and £13.95 for each subsequent child. Note however that you may have to pay a tax charge if one of the parents has income in excess of £50,000.
Employees and the self-employed will not pay national insurance contributions (NIC) on the first £9,500 of earnings from 2020/21, a significant increase from the £8,632 limit in 2019/20. Note that employers will be required to pay 13.8% on earnings over £169 per week, £8,788 per annum.
In light of the current business uncertainty surrounding the Coronavirus pandemic, the Government have decided to delay the introduction of the off payroll working rules which were due to be introduced from 6 April 2020. The legislation is now expected to take effect from 6 April 2021.
One welcome change, particularly among hospital consultants and GPs, is the increase in the threshold at which the pension annual allowance starts being tapered. From 2020/21 the adjusted income limit will increase from £150,000 to £240,000 which means that most doctors will not be caught by the restriction.
The basic rate of income tax and higher rate remain at 20% and 40% respectively, and the 45% additional rate continues to apply to income over £150,000.
The personal allowance for 2020/21 is frozen at £12,500, the same as in 2019/20. The higher rate tax threshold is also frozen at £50,000.
There has again been much lobbying from the small business sector to reduce business rates to enable traditional retailers in particular to compete with internet traders. The Chancellor announced a long term review of the future of business rates, but in the meantime there are some very welcome measures to assist small businesses.
The Government are predicting that up to 20% of the workforce may be unable to work due to Coronavirus at any one time. It had already been announced that employees would be entitled to Statutory Sick Pay from day 1 not day 4.
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