Capital gains entrepreneurs’ relief restricted
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.
National insurance contributions CHANGES
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.
IR35 “off-payroll” rules postponed to April 2021
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.
No changes to income tax rates
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.
Will inheritance tax be simplified?
Another announcement to listen out for in the Spring Budget on March 11 is whether the Chancellor acts on the recommendations of the Office of Tax Simplification (OTS) regarding inheritance tax. As reported in an earlier newsletter, the OTS suggested simplifying inheritance tax on lifetime gifts including reducing the period of potential exemption from 7 to 5 years.
Budget day is now 11 March
The December General Election meant that the Autumn Budget was delayed and we now know that Sajid Javed will deliver his first Budget on the second Wednesday in March which is when Budget day used to be! We are expecting that the tax measures in the Conservative Party manifesto will be announced again together with confirmation that changes consulted on last year will be put in place.
