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.
Rishi Sunak received a “hospital pass” when he was appointed Chancellor and was required to deliver the first Budget in nearly 18 months within a month of his appointment. He announced extra spending on roads, rail, broadband and other infrastructure projects as well as extra money for the NHS to help cope with the coronavirus epidemic.
As we are in unprecedented times and there are no doubts that business is going to be tough over the coming weeks / months. This is a guide to some support available to you as business owners at the moment, with links to the appropriate websites and government support mechanisms.
For every £2 that your adjusted net income exceeds £100,000 the £12,500 personal allowance is reduced by £1. Pension contributions and Gift Aid can help to reduce adjusted net income and save tax at an effective rate of 60%.
We are expecting major changes to inheritance tax in the March Budget following two reviews by the Office of Tax Simplification (OTS) and also a report by an All Party Parliamentary Committee. Inheritance tax is perceived as a complicated tax with numerous fairly trivial reliefs and exemptions. Currently the tax only generally applies to transfers on death and gifts within 7 years of death.
Another tax relief that may be further restricted or even abolished is Capital Gains Tax entrepreneurs’ relief. This relief allows business owners to pay just 10% Capital Gains Tax on the first £10 million of capital gains when they dispose of their business and was tightened up in the Autumn 2018 Budget.
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