Category Archives: Budget

ECONOMIC STATEMENT 8TH JULY 2020


ECONOMIC STATEMENT 8TH JULY 2020

Delivering his Summer Economic Update in Parliament, the Chancellor announced a package of measures to support jobs in every part of the country, give businesses the confidence to retain and hire, and provide people with the tools they need to get better jobs.

The plan for jobs is the second part of a three-phase plan to secure the UK’s economic recovery from coronavirus. Throughout the pandemic, the UK Government has acted with speed to protect lives and safeguard jobs.

The first stage was a £160 billion support package, which included £49 billion of extra funding for the country’s vital public services including the NHS, paying the wages of nearly 12 million people and supporting over a million businesses through grants, loans and rates cuts.

As the UK enters the second phase in its recovery, the Chancellor’s plan is designed to support jobs by focussing on skills and young people, create jobs with investment in shovel-ready projects and greening our infrastructure, and protect jobs through a VAT cut for the hospitality sector and a landmark Eat Out to Help Out discount scheme for diners.

The Chancellor of the Exchequer Rishi Sunak said:

Throughout this crisis I have never been the prisoner of ideology. For me, this has never just been a question of economics, but of values.

We believe in the nobility of work. We believe in the inspiring power of opportunity. We believe in the British people’s fortitude and endurance.

Our plan has a clear goal: to protect, support and create jobs. It will give businesses the confidence to retain and hire. To create jobs in every part of our country. To give young people a better start. To give people everywhere the opportunity of a fresh start.

The Chancellor said that following this second phase focusing on jobs, there will be a third phase focusing on rebuilding, with a Budget and Spending Review in the autumn.

Here is a summary of the proposals: –

Economic_Statement_Highlights

 


HM Treasury confirms changes to business rates reliefs


HM Treasury confirms changes to business rates reliefs

Small music venues, pubs and cinemas are set to benefit from a cut to business rates.

On 27th January the Financial Secretary to the Treasury Jesse Norman has confirmed that the government will increase the retail discount from one-third to 50 per cent, extend that discount to cinemas and music venues, extend the duration of the local newspapers office space discount, and introduce an additional discount for pubs.

The announcement came in the form of a parliamentary written statement and further details are expected to be confirmed in next month’s Budget.

The full statement was made as follows: –

The Government will increase the retail discount from one-third to 50 per cent, extend that discount to cinemas and music venues, extend the duration of the local newspapers office space discount, and introduce an additional discount for pubs.

The increase in the level of the retail discount from one-third to 50 per cent will apply in 2020/21 for eligible retail businesses occupying a property with a rateable value less than £51,000.

The extension of the retail discount is to those eligible music venues and cinemas with a rateable value of less than £51,000.

The extension of the £1,500 business rates discount for office space occupied by local newspapers will apply for an additional 5 years until 31 March 2025.

The pubs discount will provide a £1,000 discount to eligible pubs with a rateable value of less than £100,000 in 2020/21. This is in addition to the retail discount and will apply after the retail discount.

All reliefs are subject to state aid rules and apply in England only.

The Government confirms that it will fully fund local authorities for awarding these reliefs and provide new burdens funding to local authorities for administrative and IT costs.

Local authorities should start preparations to include these changes now, and act promptly to ensure eligible business receive the increased support in their rates bills at the start of the financial year.

The Government expects local authorities to ensure these changes are applied for the start of the 2020/21 billing period. The Government will publish amended guidance for the retail discount reflecting these changes as well as refreshed pubs relief guidance for local authorities.

The Barnett formula will be applied in the usual way. Consequentials for the devolved administrations will be confirmed at the Budget.

Contact Paul Southward.

Paul Southward


SPRING BUDGET AND CHANGES FROM APRIL 2020


SPRING BUDGET SET FOR 11th MARCH 2020

SPRING BUDGET AND CHANGES FROM APRIL 2020

Sajid Javid  [Now Rishi Sunak] has set the date for his first Budget on Wednesday 11th March 2020.  The Budget is the opportunity for the Chancellor to deliver an overview of how the UK economy is doing based on a five-year forecast for the economy and public finances as produced by the Office of Budget Responsibility, an independent body.

This is Sajid’s [Rishi’s] first Budget and he will be keen to make his mark and set out his personal style for future Budgets to come.  The Conservative party will want to make plans to improve the UK economy, which has been faltering under the Brexit uncertainties.

Of course, we will not know what the full Budget will include but we do have some pointers from the relatively restrained Tory manifesto tax policies.  Against this will be the constraints set by the economy forecast as the Chancellor will need to be seen to be able to “balance the books” between taxes and spending.

Here is a reminder of the Conservative Party’s Manifesto tax policies:

Tax avoidance and evasion

The taxman has been getting tougher on tax avoidance and evasion and the policies are to get even tougher to tackle opportunities for aggressive tax avoidance with a new anti-tax avoidance and evasion law, which will: –

  • Increase the maximum prison term to 14 years for persons convicted of the worst examples of tax fraud.
  • Introduce a single Anti-Tax Evasion task force within HM Revenue & Customs to coordinate their fight across all Duties and Taxes, tackling errors and deliberate non-compliance.
  • Target specific areas of tax evasion such as the construction industry, illicit tobacco sales and multi-national companies whose arrangements avoid paying UK taxes

Business tax proposals

  • Cancel the proposed cuts to corporation tax and maintain the current rate of 19%
  • Review and reform Capital Gains Tax Entrepreneur’s Relief
  • Increase the National Insurance employment allowance for small businesses.
  • No increase to VAT
  • Increase the tax credit rate for Research and Development from 12% to 13%.
  • Implement the digital services tax.
  • Increase the structures and buildings allowance from 2% to 3% and encourage investment in physical building and equipment.
  • Maintain support for creative sector tax reliefs.
  • Abolish VAT on sanitary products (following exit from EU).
  • Reduce NICs for employers that employ ex-service personnel.
  • Conduct a review of the business rates system with the aim of reducing business rates. Cutting business tax rates for small retail businesses and for local music venues, pubs and small cinemas, was specifically highlighted. Extending business rates relief for local and regional newspapers was also noted.
  • Devolve responsibility for corporation tax to Northern Ireland and consider devolving short-haul passenger duty to Northern Ireland.
  • Create up to ten free ports around the UK.
  • Review of the apprenticeship levy.

Individual’s and Taxes: –

  • Guarantee not to increase income tax.
  • Guarantee not to increase National Insurance.
  • To increase the National Insurance threshold to £9,500 in April 2020, with a goal to ultimately increase the threshold to £12,500.
  • Introduce a 3% Stamp Duty Land Tax surcharge for non-UK resident purchasers of UK property.
  • Review and reform Capital Gains Tax Entrepreneurs’ Relief.
  • Review the tax anomaly whereby some workers earning between £10,000 and £12,500 on net pay pension schemes miss out on pension benefits.
  • Maintain the State Retirement Pension triple lock.

As always, the devil will be in the Budget detail.  There are however, some significant changes already planned from April 2020: –

IR35 and off-payroll workers in the private sector

IR35 and the related employed vs self-employed rules have been a pain in the tax man’s side since the rules were introduced in April 2000.  At last the tax man has found some leverage since April 2017 when he introduced new rules for off-payroll workers in the public sector.  The changes saw a shift in the responsibility for determining a contractor’s employment status and liability to PAYE tax and national insurance, from the worker, to the engaging public body.  The result is that many more workers engaged through their own personal service companies on public body contracts have now been forced to suffer PAYE tax and national insurance on their income.

The proposals are to introduce the same rules for personal service companies engaged by large and medium sized businesses from April 2020.  Whilst the government have launched a review of the new proposals, the very best outcome that can be expected would be a postponement until April 2021.

Businesses should still be preparing for the changes as if they will still go ahead from April 2020.

Further information can be found here: –

off-payroll workers

HMRC off-payroll workers rules from April 2020

HMRC Factsheet for Contractors

Capital Gains Tax and residential property

There are several important changes proposed from April 2020: –

Accelerated capital gains tax payment and reporting

For disposals of UK residential property that give rise to a taxable gain after April 2020, a return of the gain and payment of tax must be made within 30 days of the completion.

Restriction on Private Residence Relief

Under the current rules, where there is a disposal of a property that has been someone’s private residence, the last eighteen months of ownership qualify for relief regardless of whether someone has ‘resided’ in the property during that time.  From April 2020 this period will be reduced to 9 months and could bring unwelcome tax charges to the unwary, and perhaps the unlucky.

Goodbye lettings relief

Lettings relief applies where a residential property that qualified for private residence relief had also been rented out during the total period of ownership.  The tax charge arising on the rental period of ownership was relieved by up to £40,000 (per owner).  From April 2020 this relief will all but disappear apart from a few exceptional circumstances.

Contact Paul Southward.

Paul Southward's News Roundup


Lifetime ISA


In his Budget speech today, the chancellor George Osborne announced: Lifetime ISA

This is a quick summary of how they will work.

Save up to £4,000 each year, and receive a government bonus of 25% – that’s a bonus of up to £1,000 a year. You can use some or all of the money to buy your first home, or keep it until you’re 60 – it’s up to you.

* open a Lifetime ISA account between the ages of 18 and 40, and any savings you put into it before your 50th birthday will receive an added 25% bonus from the government

* accounts will be available from April 2017

* there is no maximum monthly contribution – you can save as little or as much as you want each month, up to £4,000 a year

* the total amount you can save each year into all ISAs will also be increased from £15,240 to £20,000 from April 2017

use it to save for a first home

* your savings and the bonus can be used towards a deposit on a first home worth up to £450,000 across the country

* accounts are limited to one per person rather than one per home – so two first time buyers can both receive a bonus when buying together

* if you have a Help to Buy: ISA you can transfer those savings into the Lifetime ISA in 2017, or continue saving into both – but you will only be able to use the bonus from one to buy a house

use it to save for retirement

* after your 60th birthday you can take out all the savings tax-free

* you can withdraw the money at any time before you turn 60, but you will lose the government bonus (and any interest or growth on this). You will also have to pay a 5% charge