With Chancellor Rishi Sunak delivering his first budget today, changes announced include measures put in place to support the economy in the face of the coronavirus such as additional support for the NHS and public services and loans available for small businesses to support ‘business interruptions’.
A full summary of the budget can be found here on the BBC website and key changes include:
The news is that many of England’s retail, leisure and hospitality firms will not pay any business rates in the coming year. This is particularly welcome news for the local community in the Gloucestershire area where there is a high concentrate of these types of businesses. To qualify for the tax holiday a business must have a rateable value less than £51,000.
The Bank of England has announced a reduction of 0.5% to the base rate with a revised rate of 0.25% taking immediate effect. Although announced as a way to shore up the economy amid the coronavirus outbreak it will hopefully encourage consumers to pump more disposable income into the economy which is expected to grow at its slowest pace since the financial crisis back in 2008.
Entrepreneurs’ Relief (ER):
It was widely anticipated in the run up to the budget that ER would be abolished. The relief is available to individuals who dispose of shares in a qualifying trading company or an interest in a trading business or partnership. If the various conditions are met this will result in the shareholder or business owner paying capital gains tax at 10% rather than 20%. Rather than abolish ER The Chancellor has reduced relief available on qualifying gains from £10million to £1million. This was the limit placed on the relief when it was originally introduced in April 2008.
The government previously issued legislation to tighten up the rules applying to individuals who provide their services to organisations through their own limited company; these rules are known as IR35. The Chancellor confirmed that the new rules will be implemented from April 2020. Under the new rules any large organisation who engages the services of an individual who operates through a limited company must determine whether that individual should be treated as an employee of the organisation for income tax and national insurance contributions purposes. (Click here for our full article on IR35).
These notes have been prepared for the purpose of an article only. They should not be regarded as a substitute for taking legal advice.