A new Government with a strong majority. A new economic plan post-Brexit. And a new Chancellor too. Just what will the upcoming Budget mean for you and your business?
A new Government with a strong majority. A new economic plan
post-Brexit. And a new Chancellor too. Just what will the upcoming Budget mean
for you and your business?
The annual Budget – delivered to Parliament by the
Chancellor of the Exchequer – lays out the Government’s intentions for the
forthcoming years in regard to tax policies and spending priorities.
In recent years, it’s typically been delivered in the
autumn, but last year’s Autumn Budget was postponed because of pre-election
It means that this March will see a full Spring Budget
announced once again, and several new economic policies proposed.
When is the new Budget announced?
The Chancellor will present his Budget to Parliament on Wednesday 11th March. It usually happens around 10 am.
What will be different with the 2020 Budget?
This will be the first Budget delivered by the new
Government following the General Election in 2020. It’s Boris Johnson’s first
as Prime Minister.
We also have a brand new Chancellor – Rishi Sunak – who’ll
have been in the job less than a month when he takes to the dispatch box.
What should businesses expect to hear?
At this point, given we’ve just seen a shake-up at number 11
with the forced resignation of Sajid Javid, we’re not exactly sure what to
expect from the Budget.
We are expecting to see policies implemented from the Conservative Party Manifesto which got them elected in 2019, but this was very light on specific details. We think:
Corporation Tax will remain at 19% – so no changes for businesses
National Insurance threshold will rise – meaning an effective tax cut for everyone earning more than £12,600.
A likely roll-out of the “off-payroll” working (IR35) rules in the private sector – meaning you may have to reconsider your employment and contractor arrangements to minimise costs to your business.
Sajid Javid had spoken about reducing the amount of pension
tax relief for high earners, but his departure may see the end of that policy.
What about changes to Inheritance Tax?
As we mentioned back in November, there’s a strong
possibility the new Chancellor will decide to follow recommendations made by
the Office of Tax Simplification (OTS) and make
changes to Inheritance Tax.
All the details are in our previous blog, but listen out for
a reduction in the period of exemption for lifetime gifts – from seven years to
five years. This would be beneficial for landowners who wish to gift property or
cash to their children, as they’d only need to survive for five years for the
gift to then become exempt from inheritance tax.
Watch out for a tightening of rules and regulations
regarding Business Property Relief too. It’s possible the Chancellor will
follow OTS recommendations again here by aligning the rules for BPR with the
definition of a trading company provided for Capital Gains Tax.
It could mean a transfer of shares in your business would be
liable to inheritance tax.
As ever, if you’re thinking about passing on your business
to younger generations, we always recommend getting professional advice on
succession planning to minimise any tax liabilities you may face.
And we will, of course, have a full review of the Spring Budget and how it might affect your business after it’s been delivered.