The chancellor Rishi Sunak has delivered his first budget on the 11th March 2020, but what does it mean for UK businesses?
Tax cut on national insurance
As promised in the Conservatives manifesto the national insurance threshold will increase from April. This will not only affect the self-employed and Directors of limited companies, but anyone who
is employed will enjoy this tax break. The table below shows the changes:
|Annual National Insurance Threshold||Monthly National Insurance Threshold||Weekly National Insurance Threshold|
|From April 2020||£9,500||£791.67||£182.69|
With the personal tax allowance set to stay at £12,500 per year, this means that anyone earning up to £9,500 will not pay any tax at all in the 2020-2021 tax year.
There have been a few changes announced on VAT in the budget:
- 5% VAT on women’s sanitary products is to be scrapped from January 2021 – this is also referred to as the “tampon tax”.
- VAT to be scrapped on digital publications including newspapers, books and academic journals from December 2020.
Coronavirus statutory sick pay and interruption loan
It has already been announced that if employees self-isolate to help contain coronavirus then they will be paid statutory sick pay from the first day off work, which is to be paid by the employer. However if you are a smaller business with fewer than 250 employees the government will pay the first 14 days of isolation. Small businesses will need to reclaim the cost of the statutory sick pay.
For those that are self-employed and not eligible for statutory sick pay, they will be able to claim employment and support allowance from day one rather than day eight.
The government has also introduced a business interruption loan for small businesses affected by Coronavirus of up to £1.2m
Pension tax relief changes for higher earners
Currently the tapered annual allowance threshold for pension tax relief is £110,000, which means anyone earning over this amount sees the tax relief on pensions reduced. From April this will increase to £200,000.
The chancellor has announced that tens of thousands of England’s retail, leisure and hospitality companies will not need to pay business rates in 2020-21.
Eligible businesses are those that have a rateable value of less than £51,000, this is made in a move to help the high street and those that will be hit hard by Coronavirus causing a lower footfall. This applies to shops, restaurants, cafes, small hotels, nightclubs etc.
In addition the government have pledged a £3,000 cash grant for smaller businesses currently eligible for the small business rates relief.
There was a planned reduction in corporation tax to lower it to 17%, however this has been scrapped and the rate of tax will remain at 19% for 2020-21.
There were rumours that entrepreneurs’ relief was going to be scrapped however it has been retained at the rate of 10%, however the lifetime allowance will be reduced from £10m to £1m.
At Direct Peak accountants, we aim to do much more than just help you meet corporation tax compliance. We communicate with you throughout the year, not just at year end.
Contact our team now to see how we can help you implement the changes from the 2020 Budget into your business.