Based on rumours, political commentary and our professional hunches, here’s what we’re expecting to hear in the Budget on 11th March 2020:
Entrepreneurs’ Relief – ER at 10% is currently available on sale of qualifying business assets, which include a trading business or shares in a trading business. The rate is available on lifetime gains up to £10m then usual Capital Gains Tax rates apply. We’re expecting an increase in the ER rate and the minimum qualifying period or ownership to be raised from 2 years. There have also been rumours that it may be scrapped entirely.
An increase in income tax on dividends – Currently standing at 7.5%, 32.5% and 38.1% for basic, higher and additional tax rate payers, we’re expecting an increase either across the board or just at the basic rate.
Personal Allowance – For individuals with an ‘adjusted income’ in excess of £100,000, the tax-free personal allowance is tapered, with no PA available above £125,000. We have a feeling this tapering will be scrapped.
No more P11D? Benefits in Kind are now widely processed via payroll and we’re expecting this to become mandatory with the end of P11Ds. We also feel there’s a good chance Class 1A will be scrapped, with Class 1 NI applied to benefits and payable by both the employer and employee.
Annual Investment Allowance – 100% relief is currently available on qualifying asset purchases up to £1m and is due to end on 31 December 2020. We wouldn’t be surprised if this was extended beyond the end of the year as an incentive to boost expenditure and stimulate investment.
Inheritance Tax – We’re expecting a long-overdue major overhaul of IHT, with an upper limit on Business Property Relief to be imposed and no longer an uplift to probate value for CGT value
Pension tax relief – It was widely rumoured that higher rate tax relief on pension contributions would be abolished but this is no longer expected to be announced.
To discuss any of the above issues from Budget 2020 and understand how to optimise your tax position, contact [email protected] or call 01527 558539.
Budget 2020