1. A reduction in the Entrepreneurs’ Relief lifetime limit.
The lifetime limit is not abolished but scaled down from £10 million to £1 million for ER qualifying disposals made on or after 11 March 2020.
2. An increase in the Employment Allowance.
The Employment Allowance will be increased from £3,000 to £4,000 with effect from 6 April 2020. However, take heed that only employers whose employer NICs bill was below £100,000 in the previous tax year will be able to claim this allowance.
3. An increase in the rate of Structures and Buildings Allowance
The annual rate of capital allowances available for qualifying investments to construct new, or renovate old, non-residential structures and buildings will increase from 2% to 3%. The change will take effect from 1 April 2020 for corporation tax and 6 April 2020 for income tax.
4. An increase in the Research and Development Expenditure Credit.
Companies that are eligible for the Research and Development Expenditure Credit (RDEC) scheme will see the tax rate credit rise by 1% to 13% from 01 April 2020. This relief is given as an above the line credit for companies undertaking qualifying R&D. We should highlight that the Budget 2018 announcement that, from 01 April 2020, the amount of payable R&D tax credit that a qualifying loss-making company may receive in any tax year will be restricted to three times the company’s total PAYE and NICs liability for that year will be delayed by this administration until 01 April 2021.
5. An increase and extension of business rates discounts.
The government has already announced that, for one year from 1 April 2020, the business rates retail discount for properties with a rateable value below £51,000 in England will increase from one third to 50% and will be expanded to include cinemas and music venues. To support small businesses in response to COVID-19, the retail discount will be increased to 100% and expanded to include hospitality and leisure businesses for 2021. The government previously committed to introducing a £1,000 business rates discount for pubs with a rateable value below £100,000 in England for one year from 1 April 2020. To further support pubs, in response to COVID-19 the discount for pubs will be increased to £5,000.
6. An extended access to Statutory Sick Pay due to coronavirus.
The government will support SME employers with the cost of paying COVID-19 related SSP by refunding eligible SSP costs. Companies with fewer than 250 employees as of 28 February 2020 will be able to reclaim expenditure for any employee who has claimed SSP subject to two weeks SSP per employee. Employers should maintain records of staff absences, but should not require employees to provide a GP fit note. The eligible period for the scheme will commence from the day on which the regulations extending SSP to self-isolators come into force.
7. Previously announced measures also include the increase to the National Insurance Contribution (NIC) thresholds.
All but two NIC thresholds are due to rise in line with inflation. The primary threshold (which sets the level at which employees start to pay Class 1 ) and the lower profits limit (which sets the level at which the self-employed start to pay Class 4 NICs) are the headline changes which will each rise by 10% from £8,632 to £9,500.
8. The introduction of off-payroll working for the private sector (commonly known as IR35). The off-payroll rules which came into effect in April 2017 for the public sector will now roll out to the private sector. The reform will mean that individuals who provide their services through an intermediary (typically a contractor working through a personal services company) will need to have their status for tax redetermined by the organisation who pays them. If the worker status falls in line with deemed employment, all payments made for services provided on or after 6 April 2020 will be subject to deductions for income tax and NICs. Only medium and large businesses will be subject to the 2020 rules, so small businesses will not need to determine the status of the off-payroll workers they engage.
In January 2020, the government announced a review to address concerns from affected businesses and individuals. The government has confirmed the changes will go ahead but businesses will not have to pay penalties for errors relating to off-payroll working in the first year, except in cases of deliberate noncompliance.
9. The changes to Principal Residence Relief.
Further to the stamp duty increase and mortgage interest restriction, the government has announced the removal of letting relief and a reduction of the deemed occupation period allowable under Principle Private Residence (PPR) relief. The draft legislation that will commence 06 April 2020 will mean that the final period exemption is reduced from 18 months to nine months. Lettings relief will also be reformed so that it only applies in those circumstances where the owner of the property is in shared occupancy with a tenant.
You should contact us before taking any action as a result of the contents of this summary.