The 2020 Budget will be delivered on Wednesday 11 March. With this in mind, here we consider some of the measures that may be announced.
No rise in income tax or VAT rates
In its election manifesto, the Conservative Party stated it is committed to building a tax system that ‘rewards entrepreneurship’ whilst ‘making sure everyone pays their fair share of tax’. The Conservatives promised not to raise the rates of income tax, national insurance (NI) or VAT in order to ‘protect the incomes of hard-working families across the next Parliament’.
An increase in the NIC threshold
In its election manifesto, the Conservative Party outlined plans to increase the national insurance contribution (NIC) threshold to £9,500 in 2020/21, with an ultimate ambition to ensure that the first £12,500 of earnings would be completely free of tax.
A rise in the Employment Allowance
The Conservatives pledged to increase the Employment Allowance for UK small businesses, representing a tax cut for half a million small firms.
A review of Entrepreneurs’ Relief
Speculation is rife that Entrepreneurs’ Relief (ER) could be reformed or even abolished at the 2020 Budget. In its election manifesto, the Conservative Party promised to review the relief with a view to reforming it and better supporting UK entrepreneurs.
Other proposals, include:
- Increasing the R&D tax credit to 13% and reviewing the definition of R&D
- Exploring how the self-employed could be better supported including making the tax system easier to navigate
- Continuing to tackle tax evasion and reduce opportunities for aggressive tax avoidance
- Implementing the Digital Services Tax
- Redesigning the tax system to boost growth, wages and investment and limit arbitrary tax advantages for the wealthiest in society.
A reduction in business rates
With the Chancellor recently announcing a reduction in business rates for public houses with a rateable value below £100,000, we could see the government take a further step and reduce business rates for high street retailers in the 2020 Budget. As many as 18,000 pubs are expected to benefit from the reduction.
Making Tax Digital
We may also hear about plans to extend Making Tax Digital for income and/or Corporation Tax. We do know that any such digitisation will not happen until after April 2020 (and therefore probably periods commencing 1/6 April 2021 at the earliest).
Brexit, of course may trigger taxation changes.
VAT and EU Trade in Goods Post Brexit
Whatever happens with Brexit, and when, UK businesses will continue to trade with the remaining 27 Member States, and also within them. In addition, while the EU will be moving to a ‘definitive’ VAT system in 2022, four ‘quick fixes’ will be applied to the VAT rules for intra EU trade in goods effective from 1 January 2020. Other changes will take place in 2021
Our one-day course “VAT and EU Trade in Goods Post Brexit” will provide in-depth, practical guidance on all the VAT legal, invoicing and reporting requirements of such trade in ‘real time’. It also highlights the danger areas for unforeseen VAT registrations or obligations in other Member States arising now, and post Brexit. Trade via the internet is covered for each relevant point.
For more details and to book this course, click here.