The 2020 Budget came at a strange time; a new Chancellor, Rishi Sunak, had only been appointed a few weeks earlier, Brexit had entered its endgame, and a global pandemic was looming.
However, there were still notable announcements for individuals, business owners and accountants.
Sunak announced a number of measures to help both individuals and businesses to deal with the COVID-19 pandemic, and some of them are summarised below.
Coronavirus support announced
The Chancellor used the 2020 Budget to announce the first in a slew of financial measures designed to support the economy through the coronavirus virus. An initial fiscal stimulus package totalled £30bn, including £7bn for businesses and £5bn for the NHS.
Stamp duty increase for non-UK residents
From April 2021, stamp duty will rise to two per cent for non-UK residents buying property in the UK and Northern Ireland – up from one per cent previously.
Postponed accounting for import VAT
Postponed VAT accounting is being introduced from 1 January 2021 for all imports of goods. This means that VAT will not have to be immediately paid at the point of import when UK businesses are buying stock from the EU and non-EU countries. Instead, this will be billed on your next VAT return, and you may be able to claim relief on the VAT paid.
Off-Payroll (IR35) reforms
On the 17th March 2020, the UK government announced that it would be deferring the IR35 reforms to next year i.e. 6th April 2021 to help businesses and individuals during the COVID-19 crisis.
Despite calls to abolish Entrepreneurs’ Relief completely, the Chancellor opted to effectively increase taxation by reducing the lifetime limit for tax relief from £10m to £1m.
Freeze on alcohol and petrol duties
Fuel duty was frozen for a tenth consecutive year while wine, cider beer and spirits have also had their duty frozen. In an attempt to boost the UK’s flagging pub industry, business rate discounts for pubs were raised from £1,000 to £5,000 per year.
Corporation tax maintained
The corporate tax rate will remain at 19 per cent despite calls for a reduction to 17 per cent.
Sunak made £5bn available to bring high-speed broadband to the hardest-to-reach areas of the UK in a bid to make the country more connected and business-ready.
Relief for Statutory Sick Pay payments
Small and medium-sized businesses, those with less than 250 employees at 28 February 2020, will be able to reclaim any approved SSP payments. The actual method for making a claim is yet to be agreed as current payroll processes do not accommodate this type of refund.
National Insurance threshold raised
As of April 2020, the threshold at which National Insurance is paid will increase to £9,500 from £8,632. The Government also reiterated its pledge to raise the payment threshold to £12,500. This means a typical employee will save around £104 in 2020-21, while self-employed people, who pay a lower rate, will have £78 cut from their bill.
Business Rates Retail Discount Scheme
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.
National Living Wage (NLW)
From 6th April 2020, the NLW will increase to £8.72 from £8.21 an hour.
If you want to learn more about how the 2020 Budget might affect your business, the team at One Click Accountant is here to help.