BUDGET UPDATE In England
Personal allowance and national Insurance rates
The personal allowance will remain the same at £12,500.
Basic rate band will remain at £37,500 which means that 40% tax rate will not start hitting until a taxpayer is earning more than £50,000.
The primary threshold is now raised to £9,500, which means there will be a saving of £104 for employed tax payers and a saving of £78 for the self-employed tax payers. Budget Update
Off-payroll working rules:
This a big measure which was already announced but taking effect from 6th April 2020.
If a taxpayer is working for a medium or large organisation (as defined by the Companies Act) via an intermediary or personal service Company(PSC), the end client will be responsible for determining the taxpayer’s IR35 status and if applicable, deducting tax and national insurance before a payment is made, and paying this over to HMRC.
There was an allowable deduction of 5% for expenses this will be abolished.
The taxpayers working for small companies are exempt from these new rules and the responsibility for determining employment status still lies with them.
Debts towards HMRC: (Please Put a suitable heading)
There is a good news for those who owe to HMRC.
The Government will invest an additional £12.5m in HMRC during the tax year 2020/21 so that they could work immediately on the implementation of ‘breathing space’ system.
This system is to be introduced from early 2021 and means that people in problem debt will have a period of 60 days where no enforcement action will be taken against them and no additional interest or charges are incurred, whilst they engage with debt advice.
Making Tax Digital (MTD) for self employed
The good news for self employed tax payers that no announcement was made regarding the introduction of Making Tax Digital (MTD).
Capital gains tax (CGT)
From 6th April 2020, on disposal of a reportable capital gain arising from the sale of a residential property, a return is required within 30 days of the completion of sale. It will be necessary to submit a provisional calculation of the gain to HMRC and pay the tax within 30days.
There are also changes to Principle Private Residence (PPR) relief in that lettings relief of £40,000 is now withdrawn unless the letting occurred whilst the property was being occupied by the owner.
In addition, the final period of ownership on which PPR relief is automatically due is reduced from 19 months to 9 months.
Increase in Minimum Wage Rates/ STATE PENSIONS
Minimum wage increases, from April 2020, the new rates are as follows:
- National Living Wage for ages 25 and above – £8.72 per hour
- National Minimum Wage for 21 to 24 year – £8.20 per hour
- For 18-20 year – £6.45 per hour
- For under-18s – £4.55 per hour
- For apprentices – £4.15 per hour
Increase in State Pension rates
The full new state pension will go up from £168.60 a week to £175.20 per week.
For those who are still on the older basic state pension will increase from £129.20 to £134.25 per week.
Statutory Sick Pay (SSP)
Statutory sick pay will now be payable from day one for employees, rather than day four. For employers with fewer than 250 employees, the cost of statutory sick pay for two weeks per employee will be refunded in full by the Government.
Benefits for the self-employed
Since Statutory Sick Pay (SSP) is for employed individuals, the Government has announced the following benefits for the self-employed individuals:
Contributory Employment and Support Allowance (ESA) will be payable for people affected by COVID-19, or self-isolating, from day one, rather than day eight. Entitlement is dependent on the national insurance record of the individual.
- People affected by COVID-19, or self-isolating, will be able to claim Universal Credit and access advance payments without attending a jobcentre.
BUDGET UPDATE In England