Spring Budget 2020

This years spring budget is, in part, a direct response to the Covid 19 pandemic. While this is integral right now, we have summarised all the announcements so that you don’t miss anything important.

It is important to bear in mind that while the budget has now been announced, the Welsh government won’t issue a response until next week, meaning we can’t know how these changes will impact Wales until then.

Personal Tax

Tax guidance for self-employed people

New interactive online guidance for taxpayers with non-Pay-As-You Earn income will be released in the Summer.

 

Tapered annual allowance for pensions

The two tapered annual allowance thresholds will each be raised by £90,000 and the minimum tapered annual allowance will be decreased from £10,000 to £4,000 from 6 April 2020. From 2020 to 2021 and subsequent years the threshold income limit, the point at which an individual is assessed for the taper, will be £200,000, and the adjusted income limit, the point at which the annual allowance begins to reduce will be £240,000.

 

Cut taxes

The National Insurance lower threshold is to increase from £8,632 to £9,500.

 

National Minimum Wage

The government has said it will be looking to increase the living wage to £10.50 per hour.

Business Tax

Capital Allowances for Business Cars

From April 2021 the first-year allowance on zero emission vehicles will be extended, and writing down allowance (WDA) of 18% will apply to cars with emissions up to 50g/km.

 

Intangible Fixed Asset regime

Legislation in Finance Bill 2020 will remove the pre-2002 exclusion from the Intangible Fixed Assets (IFA) regime. This means tax relief for the cost of acquiring corporate intangible assets on or after 1 July 2020 will be provided under a single regime, subject to restrictions to prevent tax avoidance.

 

Digital Services Tax (DST)

As previously announced, a new 2% tax will be introduced on the revenues certain digital businesses earn from 1 April 2020. Legislation will require businesses to pay the DST on an annual basis. The government will repeal the DST once an appropriate global agreement on digitisation is reached.

 

Entrepreneurs Relief

The lifetime limit will reduce from £10m to £1m.

 

R&D and other allowances

There will be an increase in the tax credit for expenditure from 12% to 13%.

 

Structure & building allowance

There will be an increase from 2% to 3%.

 

Employment allowance

Employment allowance is to increase to £4k, from current £3k.

 

Corporation tax rate

Will remain at 19%.

 

Loans

New funding will be made available for start-up loans and also more money for expansion and export loans.

Covid-19 Emergency Changes – Personal

Statutory Sick Pay (SSP)

In keeping with advice currently being given to prevent the spread of Covid-19, paid SSP from day 1, rather than day 4 of sickness. SSP is for all affected, even if they are advised to self-isolate but not unwell. Sicknotes will be available via the 111 helpline.

 

Self Employed Support

Self-Employed individuals can access benefits more easily and the minimum income floor for Universal Credit has been temporarily removed.

 

Hardship Fund

A hardship fund for local authorities will be put in place.

Covid-19 Emergency Changes – Businesses

SSP reimbursement

For Small Medium Enterprises (SME) with less than 250 employees, any SSP paid due to Covid19 will be refunded by the government in full for up to 14 days.

 

Time to pay

The government are scaling up time to pay arrangements on deferment of tax payments.

 

Cashflow loans for losses

Even with the above support, cashflow can still be an issue and some businesses will need loans.  Therefore, the Government have set up new temporary Covid-19 loans with up to £1.2m loans available.  These loans can cover up to 80% of losses with no fees.

 

Business Rates

Business rates will be abolished altogether for the leisure and hospitality industry this year and they have extended the 100% retail discount to further eligible retail, leisure, and hospitality businesses whose rateable value is below £51k for this year.

The Autumn budget will revisit business rates again later in the year.

 

Cash Grant

To enable SME’s to manage fixed costs, a £3k cash grant per business will be available if they are currently entitled to small business rates.

 

Pubs

Business rates were due to be reduced by £1k for small pubs, however this year the business rate discount will be £5k for eligible establishments.

NHS

Considering the potentially wide spread and damage of Covid 19, the NHS has been told that it will have the funding that they require, whatever that necessary funding may be.

50,000 more nurses have been promised to help bolster the NHS. 31,000 of those nurses will actually be newly recruited and the remaining 19,000 would be jobs saved by this investment.

Other Points

Beer Duty

The planned rise in beer duty will not go ahead and there will be a freeze on the duty on cider and wine.

 

Fuel duty

For this year fuel duty will continue to remain frozen.

 

Invest in ideas

An investment £22bm is being put into Research & Development.

 

Science and Technology

The government will broaden investment into high quality science centres around the country, not just in London.

 

Pollution

We will see an increase in taxes on pollution.

 

In April 2022 the levy on electricity will be frozen and increase on gas.

 

30,000 hectares of trees will be planted to combat deforestation in an effort to move towards carbon neutrality.

 

Plastic

The introduction of a plastic packaging tax will be put in place from April 2022.

 

Red diesel

Current tax relief will be removed for most sectors. It will not take affect for two years and agricultural will retain the relief alongside rail, domestic heating and fishing industries.

 

Cars

£1b will be invested into green transport solutions.

 

£500m will be put into supporting rapid charging hubs for electric cars.

 

Flood

Money will be contributed to building up flood resilience. Existing flood defences will be doubled to £5.2b.

 

Build infrastructure

Investment will be available for roads, broadband and infrastructure.

 

Education

There will be a per pupil funding increase and extra funding for art, maths and football.

 

Further education

£1.5b new capital over 5 years.

 

Reading Tax

Due to the importance of literacy, reading tax (VAT) has been removed from 01/12/2020.

 

Funding

£360m has been pledged for Welsh Government.

 

Housing

The government is cutting the interest rates for affordable housing.

 

There will also be reforms to planning permission.

 

Homelessness

£650m pledged for homelessness to end rough sleeping.

 

Stamp Duty

Stamp duty for non–residents will be 2% from April 2021.

 

Cladding

Unsafe materials from high rise buildings will have new funds available.

 

Mental Health

£10m for mental health facilities and programmes for veterans.

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