The 11 March 2020 budget – main effects for owners of small business:

The cost of statutory sick pay for up to 14 days will be refunded by the government in full.

Any company eligible for small business rates relief will be allowed a £3,000 cash grant – a £2bn injection for 700,000 small businesses.

Business rates will be abolished for this year for retailers

Corporation tax rate to remain at 19%.  It had been set to reduce to 17% but government had said that reduction had been cancelled sometime ago.

If you have employees or directors paid above the secondary national insurance threshold (£732 per month) then salary above that limit is subject to employers national insurance at 13.8%.  Currently the total annual bill for the employer business is reduced by £3000, called the “Employment Allowance”.  This is increasing to £4000 from 2020/21 tax year.

If you sell your business, subject to many criteria, you may benefit from Entrepreneurs Relief.  This reduces the capital gains tax rate on the gain on sale of business from 20% to 10%.  This has been restricted to only apply to the first £1M of gains from today (was first £10M of gains).

100% Capital Allowances on zero emission cars was due to end April 2021 now due to end April 2025

Pension contributions have been mainly untouched.  One change to note is that the maximum annual pension contributions of £40,000 for most people reduces for high earners.  The level at which the reduction starts has been increased from £110k to £200k (and the lowest allowance for very high earners has been reduced from £10k to £4k).

From 1 December 2020 some taxes (VAT, PAYE, employees NI, Student Loans, CIS) will be payable to HMRC ahead of other creditors in the case of insolvency.

No VAT on digital publications from 1 December 2020. To apply to all books, magazines and publications.

Tampon tax to be abolished, no VAT from 1 January 2021.

R&D tax credit increased from 12% to 13%.

Structures and Buildings Allowance increased from 2% to 3%.

 

David Wilsdon

 

As with all of our tax tips and web pages this information is necessarily summarised and of a general nature.  If you would like detailed specific advice please contact us