Rishi Sunak’s first Budget as Chancellor was understandably overshadowed by the ongoing coronavirus outbreak, with a number of measures introduced to deal with the economic impact. Perhaps as a result of this issue, and his short time in office, the number of tax-related proposals announced were markedly less than in most previous Budgets.
We have set out below a brief summary of some of the main personal tax points:-
- The basic personal allowance will remain unchanged at £12,500 in 2020/21.
- The higher rate threshold will also remain unchanged at £50,000 in 2020/21.
- The annual Capital Gains Tax (CGT) exemption for 2020/21 will be increased to £12,300 for individuals and personal representatives (£6,150 for trustees).
- Individual ISA subscriptions will remain at £20,000 for 2020/21; the Junior ISA subscription rises from £4,368 to £9,000 from 6 April 2000.
- The lifetime allowance for pensions will rise to £1,073,100 on 6 April 2020, from the current level of £1,055,000. Furthermore, technical changes are to be introduced to the tapered annual allowance, introduced in April 2016 to restrict the amount of tax-relievable contributions that can be made by those earning more than £150,000.
- The most notable announcement concerns Entrepreneurs’ Relief, which provides for a 10% rate of CGT to apply on disposals of all or part of a business (subject to detailed conditions). Taking effect for transactions entered into on or after Budget Day on 11 March, the lifetime limit is to be reduced from £10 million of qualifying gains down to £1 million.
- The thresholds at which employees and the self-employed start paying National Insurance contributions will be increased to £9,500 from April 2020.
The above list is, of course, far from exhaustive and is based on the information so far available. As ever, further details on most topics will only emerge over the coming weeks as the Finance Bill passes through Parliament, but we hope that this is a useful starting point.
We will continue to provide updates as and when appropriate, but in the meantime please do not hesitate to contact us if there is any particular issue you would like to discuss.