Budget 2020: What can we expect?
Tax specialist Nigel Woodward looks forward to potential announcements on 11 March.
This will be the UK's first Budget as a non-EU state in more than four decades, the first one post-election and an opportunity for the new Chancellor to make some major reforms. So what should we expect?
For a start, the date remains unchanged. Following the recent resignation of his predecessor, Sajid Javid, it had been suggested there may be a delay, but Rishi Sunak has confirmed his first Budget will go ahead, as planned, on Wednesday March 11.
We take a closer look at some of the Budget predictions and how these could impact on your personal finances.
Pension Tax Relief
Pension reforms are a pre-budget favourite and there is speculation that possible changes may include restricting tax relief to 20%, so only high earners would be affected.
Pension Tracking
A possible introduction of a pensions dashboard to help people keep track of their retirement savings by displaying all pension pots, including the state pension, online.
Inheritance Tax
There is potential to make large-scale changes to inheritance tax, with proposals to reduce the rate to 10% and introduce a cap on tax-free cash gifts over a lifetime.
National Insurance
As previously announced, it is expected the threshold at which National Insurance starts to be paid will increase to £9,500, from the current figure of £8,632.
Housing
This is a key area for the Government. The Queen's Speech suggested that a new policy would be introduced to support homeownership, including making homes available at a discount to local first-time buyers.
Mansion Tax
The introduction of a 'mansion tax' for homeowners with larger properties, mainly located in the South, appears to have been shelved for now.
Social Care
The Government has promised to tackle the social care crisis to 'ensure that the social care system provides everyone with the dignity and security they deserve and that no-one who needs care has to sell their home to pay for it'.
Tuition Fees
Following the government-commissioned student finance review in May 2019, it has been suggested that tuition fees might be cut to £7,500 pa, with the possible downside of extending the loan repayment period from 30 years to 40 years.
Entrepreneurs Relief
It is expected that there will be a cut in entrepreneur's relief, with the current measures criticised for benefitting wealthy business owners and failing to achieve their aim of encouraging business investment. Speculation about the changes includes an increase to the current 10% rate of tax or possibly decreasing the lifetime limit of £10m on gains from qualifying business disposals.
Stamp Duty Land Tax
There may be changes to SDLT, especially given that Boris Johnson pledged in his election campaign to remove duty from all sales of homes under £500,000. He has, however, also mentioned the payment of the duty being the responsibility of the seller rather than the buyer.
Protect access to cash
It has been suggested that the nation's cash system could collapse within the next 10 years unless measures to guarantee long-term access to notes and coins are put into place. A clear strategy to ensure the transition to digital payments needs to be implemented.
Help for businesses
Short-term cuts to business rates have already been promised for smaller businesses, pending a more radical long-term review, which should help support the local high street.
Business Investment
Incentives for business investment have already been announced, with an change in the rate of Research and Development Expenditure Credit (RDEC) from 12% to 13%, and an increase in the rate of Structures and Buildings Allowance from 2% to 3%, both effective from April 2020. The latter is designed to encourage businesses to start building new facilities.
After the budget on 11th March, our Director of Tax, Neil Moon, will write a summary article about what the decisions could actually mean for you and your business.
If you need any more information, or want to discuss anything in this article, please call 0115 955 5500 or email enquiries@pagekirk.co.uk.