The Spring Budget on 11 March this year was unusual for many reasons.
It was, in effect, a postponed Budget for 2019, which had been cancelled in the lead-up to the general election in December last year.
It was also the first Budget speech made by Chancellor Rishi Sunak, who had succeeded Sajid Javid in the role only 27 days earlier.
Above all, though, it was a Budget to announce huge spending measures – the largest in nearly 30 years – and to reassure people and businesses as the country deals with the impacts of the coronavirus pandemic.
A package of temporary support measures were announced, including a business rates holiday for 2020/21, reimbursement for statutory sick pay, and cash grants for small businesses.
These measures have since been updated to include further support, and you can find the latest information on the Government website.
Other key announcements included the reduction of the entrepreneurs’ relief lifetime limit from £10 million to £1 million. This means anyone whose gains exceed £1m when they sell all or part of their business from April 2020 onwards may have to pay a higher rate of capital gains tax.
Also starting from April, the employment allowance will increase from £3,000 to £4,000, which the Government says will benefit around 510,000 businesses.
It was also confirmed that the starting threshold for national insurance contributions will increase to £9,500.
Meanwhile, fuel duties were frozen for 2020/21, along with all alcohol duties.
How will Spring Budget 2020 affect Munro & Partners’ clients?
The Chancellor’s spending announcements included a £5bn investment in gigabit broadband for rural areas, and commitment of up to £510m in funding for better mobile network coverage. Both of these measures are intended to improve connectivity across the country.
For businesses carrying out innovative projects in science and technology, there may be an opportunity to benefit from R&D tax reliefs, as the R&D expenditure credit (RDEC) is increasing from 12% to 13% in April. This relief is generally aimed at businesses that do not meet the requirements of SME R&D relief, or smaller businesses carrying out contracts for larger companies.
It was also confirmed that the digital services tax will come into force from 1 April 2020. This is aimed at multinational businesses that provide search engine, social media and online marketplace services, so its impact on smaller tech businesses is likely to be minimal.
Museums, art galleries and theatres, along with all other retail and hospitality properties, are included in the year-long business rates holiday that was put in place to support businesses during the coronavirus outbreak.
It’s also possible for creative businesses to claim R&D relief, so your business may benefit from the increased RDEC.
Additionally, it was announced that digital publications will be zero-rated from 1 December 2020. This applies to eBooks, as well as online newspapers, magazines and journals.
Contractors in the professional services sector will have been waiting to hear any news on the reform of off-payroll working rules in the private sector, which was planned for April 2020.
While there was no mention of this in the Budget, a more recent announcement saw the changes delayed until April 2021, giving businesses and contractors more time to prepare.
Another change that could affect those in the professional services sector was the adjustment to the tapered annual allowance, which reduces the annual allowance for pension contributions when an individual has income above certain thresholds.
The two thresholds for the taper were each raised by £90,000, meaning fewer people will be caught by the rule.
The changes were announced in the context of solving the dilemma for senior NHS professionals, after reports that GPs and consultants had been turning down extra shifts to avoid high tax bills.
However, the taper applies to any high-earning professional, so if your income is between £110,000 and £200,000, you might benefit from the new rules from April.
If you’re not sure whether the announcements made in the Spring Budget will affect your business, or if you want advice and support in these challenging times, get in touch.