29th January 2020
When the Chancellor of the Exchequer, Sajid Javid, announced that the 2020 Budget would take place on Wednesday 11 March he did so under the banner of ‘a decade of renewal’. Not only will this be the first Budget following the UK’s departure from the European Union, it will also bring the first indications of how the Government plans to put its election promises into action.
With the Budget some six weeks away at the time of writing, we take a look at some of the current predictions and consider how they may impact on South West businesses.
Tax. The Conservative manifesto pledged to reduce tax for UK workers via a cut in National Insurance. Commentators generally expect this measure to appear in the Budget alongside another manifesto pledge, an increase in the employer’s National Insurance allowance. This particularly will help smaller businesses. On the other side of the coin, prior to the election the Government announced that planned cuts to Corporation Tax rates would be put on hold.
Entrepreneur’s Relief & Property. In its manifesto the Conservatives pledged to review and reform Entrepreneur’s Relief. This, together with a possible shake up of capital gains tax, could have a significant impact on business planning. The current thinking is that entrepreneur’s relief is more likely to be curbed or reformed to benefit smaller businesses rather than abolished. On a more positive note, it has been reported that the structures and building allowance may well rise from 2% to 3%.
A ‘fundamental review’ of business rates was also pledged in the manifesto alongside a further reduction in business rates for retail businesses. This manifesto also signalled that this reduction will also be extended to grassroots music venues, small cinemas and pubs.
Off-Payroll Workers. This is another area in which change is planned, with the IR35 rules for public sector workers planned to be extended to the private sector in April this year. This is now subject to a recently announced review which is due to be finished by middle of February and any changes arising are likely to feature in the Budget in time to be implemented by the scheduled change date of April 2020.
In view of this we still strongly recommend that contractors arrange for a review of contracts and working practices, not only to ensure that contracts reflect actual working conditions but also to demonstrate that reasonable steps have been taken in order to ascertain IR35 status.
R&D Tax credits. The manifesto pledged to increase these from 12% to 13%. More importantly there is also a pledge to review of the definition of R&D to include areas such as cloud computing and data. It is expected that whilst the review will be announced the expansion of the definition of R&D may form part of a later Budget.
Infrastructure and transport. We have already seen the impact of the Government’s intention to support transport infrastructure with its intervention into the Flybe saga. The manifesto pledges to improve transport across the UK and specifically mentions improving train lines to the South West. The South West water rebate scheme is also to be extended. A pledge to roll out gigabit broadband across the UK should also benefit those South West businesses which are currently struggling with low connection speeds.
Thompson Jenner Partner Simon Lewis commented. “This first Budget after the UK’s departure from the European Union will be key in helping businesses in Devon make a successful transition to a strong post Brexit future. As we expect some important announcements, we would like to extend a warm welcome for you to join us at our annual Budget breakfast briefing on the 12 March at Woodbury Park.”
As always, our tax team will unravel the detail to explain what the Budget really means for individuals and businesses in Devon and across the South West.
Book your FREE place online at our Eventbrite page or you can contact Claire Churchill or Sara Martin on 01392 258553 or email events@tjllp.com to register your attendance.
