Unlocking tax

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Expert analysis

Rishi pickings - Rishi Sunak may have only been Chancellor for four weeks, but he has certainly started with a bang.  Rarely do you see such a significant spending plan with very little in the form of tax measures to pay for it.  It would appear clear that the Chancellor is going to be using the very low interest rates currently available and borrow to fund, because the annual net cost of the measures announced amount to £42 billion by 2024/25. Read more here.

Entrepreneurs' relief slashed - As many expected, the Chancellor announced a reduction in the ER lifetime limit from £10 million to £1 million for sales on or after 11 March 2020. Read more here.

ISAs - The adult ISA limit will be maintained at £20,000 for 2020/21 rising in line with consumer price index thereafter. The adult ISA threshold was originally increased to £20,000 in 2017/18. Read more here.

Top slicing relief - Top slicing relief allows for the chargeable event gain to be ‘top sliced’ to reflect the number of years the life policy gain has been earned over. Read more here.

Business rates and cash grants to small businesses - The main announcement on business rates was one of the measures to help small businesses trying to cope with the effect of Coronavirus.  It was the abolition of the charge for one year for all shops, restaurants, cinemas and music venues with rateable values below £51,000.  Read more here.

Red diesel - Good news for farmers! Despite the Chancellor announcing that many businesses will no longer be entitled to use red diesel in all its present uses, sectors including agriculture, fish farming and the railways and power to non-commercial heating systems will not be affected. Read more here.

Corporation tax - The corporation tax rate is to be held at 19%, rather than falling to 17% from April 2020 as originally planned.  The 19% rate is set for the tax years 2020/21 and 2021/22 as well.  This rate of corporation tax does not apply to ring fenced profits of oil and gas companies, which remain subject to different corporation tax rates. Read more here.

Intangible fixed assets - The budget has introduced a measure to simplify the overly complex IFA tax regime. IFAs that were created before April 2002 fall under the chargeable gains rules for corporation tax purposes. Read more here.

Employment allowance increase - Rishi Sunak announced an increase to the employment allowance in the 2020 budget.  This allowance will increase by one third from £3,000 to £4,000 from April 2020. This measure is expected to reduce national insurance contribution (NIC) bills to nil for up to 65,000 businesses, allowing them to take on staff without incurring additional NIC liabilities. Read more here.

Cars, vans and fuel - Changes to car and van benefits were announced. All increases are in line with the Consumer Price Index will take effect from 6 April 2020. Read more here.

National insurance - The Chancellor announced an increase in the primary threshold and lower profit limit for national insurance (NI) to £9,500 in April 2020. This measure will increase the primary threshold for employees and the lower profits limit for the self-employed. The secondary threshold is not affected. Read more here.

Pensions: a gift with a sting in the tail - The chancellor announced an increase to the two thresholds over which the annual allowance begins to be tapered from 6 April 2020. Those individuals with a ‘threshold income’ of up to £200,000 and ‘adjusted income’ of up to £240,000 will no longer be subject to a restriction of the annual pension allowance. Read more here.

VAT - The VAT registration and deregistration thresholds remain at £85,000 and £83,000 of taxable turnover respectively. The standard and reduced-rates of VAT remain at 20% and 5%. Read more here.

Stamp duty land tax - A new 2% surcharge is to be introduced from 1 April 2021 for all purchases of residential property by non-UK residents.  This is in addition to the current surcharge that applies to additional dwellings or those purchased by a non-individual. Read more here.

Plastic packaging tax - A tax of £200/tonne is proposed to be introduced from 1 April 2022 for domestically produced or imported plastic packaging with less than a 30% recycled content. Read more here.

Ruth Dooley's initial reaction

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