Budget Summary – March 2020

Please find below a summary of the Budget changes that were recently announced.  We have included the main points that are likely to directly affect our clients.

Coronavirus Measures

All those advised to self-isolate will be entitled to statutory sick pay, even if they have not presented with symptoms.

Self-employed workers who are not eligible will be able to claim contributory Employment Support Allowance (ESA).  This will be available from day one rather than after a week.

Firms with fewer than 250 staff will be refunded for sick pay payments for two weeks.

Small firms will be able to access "business interruption" loans of up to £1.2m.

Business rates in England will be abolished for firms in the retail, leisure and hospitality sectors with a rateable value below £51,000.  Some reports are written in a way to suggest that this applies to all small businesses but this is not correct.  Only applies to the leisure industry.

Firms eligible for small business rates relief will get £3,000 cash grant.

Other Measures

The tax threshold for National Insurance Contributions will rise from £8,632 to £9,500.  This means £792.00 per month without tax or NI deducted.

Stamp duty surcharge for foreign buyers of properties in England and Northern Ireland to be levied at 2% from April 2021

Entrepreneurs' Relief will be retained, but lifetime allowance will be reduced from £10m to £1m

Those working from home, who can claim £4 a week off their income tax bill, will be able to claim £6 from April.

From April 2020 the amount earned before paying 20% income tax will be frozen at £12,500. Also frozen is the £50,000 threshold at which people start to pay the higher 40% rate of income tax. 

Practically, that means anyone who gets a pay rise in the coming year may be at risk of paying more than they expected in tax, as the extra wages mean they cross these thresholds.

Many self-employed people face a higher tax bill from April, when the so-called IR35 rule is extended to the private sector. That could mean thousands of contractors and freelancers will pay more tax

Corporation Tax remains at 19%

The National Insurance Employers Allowance from April 2020 is increased by £1,000 to £4,000 per annum.

You cannot claim if:

• you’re the director and the only employee paid above the Secondary Threshold 
• you employ someone for personal, household or domestic work (like a nanny or gardener) - unless they’re a care or support worker 
• you’re a public body or business doing more than half your work in the public sector (such as local councils and NHS services) - unless you’re a charity
• you’re a service company working under ‘IR35 rules’ and your only income is the earnings of the intermediary (such as your personal service company, limited company or partnership).
• The Class 1 National Insurance bill was above £100,000 in the previous tax year.

 Most of our clients do not fall into these categories.

Please contact us if you require any further information.

Best Regards

David Turner – Proprietor – Complete Accounting Services