There was much eagerness amongst business owners to see the outcome of the first Rishi Sunak budget and how it would impact both their businesses and the finances of themselves and their families.  For the last few months, rumours have been circulating the internet including radical changes to Entrepreneurs Relief, off payroll rules and what the government would be doing to boost the economic outlook for businesses around the country.  So, a few hours on and after digesting the red book, here is our initial comments on the budget and what it means for you…

 

  • Corporation tax remaining at 19% – This was announced months ago but the government officially confirmed this today
  • The sales on online books and newspapers will be zero rated for VAT purposes
  • Abolition of tampon tax – Woman’s sanitary products will be zero rated for VAT purposes from 1 January 2021
  • The government is setting up a working group to assess whether financial services should be vatable
  • The government will continue engaging with stakeholders to discuss a simplified process to the partial exemption VAT treatment and the capital goods scheme
  • There will be no increase in duties for many items including fuel and alcohol, but tobacco will rise from between 2% and 6%
  • The Domestic Reverse charge for building and construction services has been postponed to 1 October 2020 as announced earlier in the year
  • The government is intending to bring in £4.4 billion of additional tax revenue from compliance checks and expanding debt collection capabilities
  • Zero emission vans will no longer be subject to the van benefit charge
  • Company car tax rates will reduce for cars registered from 6 April 2020 by 2%, increasing by 1% each year until 2022/2023, at which point they will be frozen until 2024/2025.
  • The expensive car supplement will no longer apply to zero emission cars
  • The government will introduce a 2% stamp duty land tax (SDLT) surcharge on non-UK residents purchasing residential property in England and Northern Ireland from 1 April 2021.
  • Entrepreneurs relief – The £10 million lifetime allowance will reduce to £1million
  • Research and Development Credit will increase from 12% to 13% from 1 April 2020
  • The employment allowance will increase from £3,000 to £4,000, saving many companies £1,000 in employment taxes
  • The government has announced various discounts for small business rates
  • The rules regarding the tapering of pension relief are changing and the threshold income will be an increased to £200,000 per annum (adjusted income to £240,000). These changes are effective from April 2020
  • The government has announced an increase in the flat rate deduction for homeworking and this will be increasing from £4 per week to £6 per week, effective April 2020.
  • The National Insurance threshold (currently £8632) is increasing to £9,500 per year, and the government is working towards increasing this to £12,500. The £9,500 threshold would mean a benefit to employees of £104 per year and £78 for those that are self employed.
  • Small firms can look at accessing business interruption loans of up to £1.2million
  • Taxpayers effected by COVID-19 will be able to negotiate better time to pay arrangements with HMRC
  • Announcement of a relaxation in the rules of Statutory Sick Pay (SSP) with the COVID-19 Virus.

 

In summary, in a budget where there are potentially tough times ahead with the COVID-19 virus, there are many things to be hopeful about for both individuals and business owners.  If you have any questions about the above, please feel free to contact us and we can look at how we can help you.