Chancellor of the Exchequer Rishi Sunak announced his Budget to Parliament on Wednesday 11 March; the wider implications of which are sure to impact upon SMEs across the UK.
This budget has come at a rather interesting and complicated time, and included some rather interesting and complicated announcements, but fortunately the tax elements of it weren’t really among them. Most of the tax changes were either announced earlier, or are following on from recent moves and so don’t really change the position much. Certainly, most of them are small beer compared to the changes to business rates, and perhaps the National Living Wage.
There are some exceptions. Entrepreneur’s Relief being cut to cover only £1 million of gains is better than complete abolition, but is rather harsher than some people were hoping for – especially as the anti-forestalling rules mean that people who were trying to hedge their bets slightly are often going to be disappointed. We think that’s probably a lesson for the future: if you think tax rules might change then you need to take firm action, as dithering will just give you the worst of both worlds.
Budget 2020 Headline Announcements:
- Personal Announcements
- Personal – Rates & Allowances
- Business Announcements
- Duties – stamp duty surcharge for non-UK residents
- VAT – Construction industry reverse charge reminder
- Other Announcements – Plastic packaging tax
The extension of pension tapering is notable more for being a relaxation of the rules without any of the tightening that has been rumoured for a few years now, and changes to Structures and Buildings Allowances, NIC allowances and Research and Development Expenditure Credit (RDEC) don’t excite us enormously, but are certainly welcome.
Otherwise the main message seems to be around flagging up areas the Government is interested in, for future consideration. Clearly someone is quite excited by the opportunity to change VAT rates, the SDLT surcharge is another dig at overseas purchasers, and we’re interested to see that HMRC are increasingly wanting other people to do their work for them. Local authorities are going to have to check people are registered for taxes, large businesses will have to flag their own issues for enquiry, and tax advisors are going to be reminding HMRC that cross-border tax can be complicated.
Budget 2020 Responses from Lambert Chapman Partners:
“Rates have been slashed and for me it’s difficult to see how they get reintroduced because many businesses find them a burden. Maybe it’s an Amazon Tax that might be the answer?”
“The chancellors speech was engaging, provided the sensitivity currently needed and was sympathetic to the issues faced by all.”
“There was some mention in the budget of the increased electric car charging points as part of the infrastructure spend, but no real mention of the significant improvement to the electric company car tax rates that start from 6 April 2020..”
“Abolishing business rates for small firms in retail, leisure and hospitality sectors with rateable values under £51k for next financial year will be very helpful for small firms…”
“I have to admit surprise that no changes to Inheritance Tax were announced – there has been a lot of discussion about this, and some strong recommendations for the All Party Parliamentary Group on IHT were published in late January…”
“I hope the spending spree and debt increase will not leave the Country’s finances in a parlous state, as this type of action normally does…”
“I thought that his announcement on Entrepreneurs Relief was reasonable. I had been fearing its complete abolition. This would have been a great shame as I have seen situations where it has been very effective…”
Budget 2020 Related News:
- 12 March 2020 – What the key industry groups have to say about the Chancellor’s Budget speech
- 11 March 2020 –Spring Budget 2020: Expectations
- 6 March 2020 – BCC: ‘Use the Budget to boost businesses’
- 4 March 2020 – Predictions for Spring Budget 2020