Spring Budget 2020 Summary

Spring Budget 2020 Summary

Thursday, 12 March 2020

The chancellor delivered his budget speech yesterday and what a speech it was!  There were tax freezes, new surcharges, threshold amendments, brilliant one liners and more.

Measures to mitigate the impact of Coronavirus

  • £12 billion package of tax and spending measures including grants and hardship funds for people and businesses affected
  • Statutory Sick Pay to be payable from first day’s absence and fully funded by the Government for 14 days; support also for workers in gig economy and self-employed, and relaxed conditions for those who self-isolate
  • Business rates relief for the next year increased from 50% to 100% for retail businesses with rateable values up to £51,000; this relief extended to leisure and hospitality businesses as well, and further relief for small pubs
  • Small businesses already eligible for 100% rates relief to receive £3,000 cash payment
  • Businesses and individuals with cash flow difficulties promised ‘Time to Pay’ their taxes with a dedicated HMRC helpline

Tax measures with immediate effect

  • Lifetime limit for gains eligible for Entrepreneurs’ Relief (taxed at 10% instead of 20%) reduced from £10 million to £1 million for disposals from Budget day (11 March 2020)
  • Duties on alcoholic drinks and fuel frozen
  • For individuals with life insurance gains, the top-slicing relief calculations will now include the tax free personal allowance, if it was available, based on other income and the averaged life insurance gain

Tax year 2020/21

  • No changes to personal income tax allowances and rates: 2019/20 figures continue for a second year, as expected
  • Increase in threshold for National Insurance Contributions from £8,632 to £9,500
  • Increase in thresholds for ‘Annual Allowance pensions taper’ from £110,000 and £150,000 to £200,000 and £240,000
  • Lifetime Allowance for pensions increased in line with inflation to £1,073,100
  • The minimum level to which the annual allowance can taper down will reduce from £10,000 to £4,000 from April 2020. This reduction will only affect individuals with total income (including pension accrual) over £300,000
  • ISA allowance remains £20,000 per year, but Junior ISA/Child Trust Fund limits rise from £4,368 to £9,000
  • The CGT Annual Exemption will rise to £12,300 from 2020/21. (Where applicable the trust rate is £6,150)
  • Corporation Tax rate remains 19% rather than being reduced to 17%
  • No changes announced to ‘off-payroll working’ (IR35) rules, so they will apply to larger private sector employers from 6 April 2020 as previously announced
  • No change announced to new rules for reporting and paying CGT on chargeable residential property, so deadline becomes 30 days
  • Employment Allowance for small businesses increased from £3,000 to £4,000 of Employers’ NIC
  • Research & Development expenditure credit (RDEC) increased from 12% to 13%. (There were no changes to the Research & Development SME scheme)
  • Structures and Buildings Allowance increased from 2% to 3%
  • The CO2 emissions thresholds for determining the rate of capital allowances for expenditure on cars has reduced from 110g/km to 50g/km. First year allowances will now only be available on zero emission cars
  • First year allowances on zero emission goods vehicles and equipment for gas refuelling stations has been extended to April 2025
  • The flat rate £4 per week use of home adjustment has been increased to £6 from April

Tax measures coming into effect later

  • VAT ‘Domestic Reverse Charge’ on construction services, deferred from 1 October 2019, confirmed for introduction on 1 October 2020
  • VAT zero-rating to apply to digital versions of newspapers and books as well as printed versions from 1 December 2020
  • Abolition of VAT on women’s sanitary products from 1 January 2021
  • VAT on imports to be dealt with by ‘postponed accounting’ (on the VAT return, not on the docks) by businesses from 1 January 2021
  • Stamp Duty Land Tax surcharge of 2% introduced for non-resident buyers of UK property from 1 April 2021
  • Tax relief on ‘red diesel’ removed for most sectors but retained for agriculture, home heating and rail in April 2022
  • New plastic packaging tax for manufacturers in April 2022, as well as a shift in Climate Change Levy from electricity to gas


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