Business

A Budget for uncertain times...

Tom Penman (tax partner) and Angela Keery (tax director) at Belfast-based accountancy and business advisory firm Baker Tilly Mooney Moore with their take on the much anticipated first Budget under Boris Johnston’s Conservative government

Tom Penman
Tom Penman Tom Penman

IT'S fair to say that businesses have already been through a period of uncertainty around Brexit, with many of the practical implications still to be worked through.

The arrival of coronavirus has added to that uncertainty, and if it becomes as prevalent as some models predict, it may well be the biggest concern not only for the survival of UK business but businesses worldwide.

In light of these issues, many of us were expecting the Budget to contain a range of measures to ease trading conditions and provide some assistance for UK businesses and we welcomed announcements such as:

:: Full support for the NHS for any extra resources required to deal with the coronavirus (regardless of how much it will cost).

:: Immediate support for individuals’ finances in light of the challenges arising from coronavirus - including payment of statutory sick pay from day one. Individuals that are required to self isolate, even if they have no symptoms, will be due statutory sick pay from day one as well.

:: Businesses with less than 250 employees will be able to reclaim statutory sick pay from government.

:: The national insurance contributions (NIC) threshold, the rate at which employees and employers start paying will increase to £9,500 from April.

There were few unexpected tax changes announced, although as always the devil is in the detail. The main changes affecting local businesses and individuals include:

:: Income tax – no increase in the personal allowance of £12,500 or income tax rates. The starting rate for the savings tax band and the ISA annual subscription limit remain unchanged. The Junior ISA and Child Trust Fund annual subscription limits have more than doubled from £4,368 to £9,000.

:: Entrepreneurs’ relief – The maximum capital gain for individuals that is eligible for relief has been reduced from £10m to £1m with immediate effect. This would increase an entrepreneur’s tax liability by £900,000 on a £10m gain (the effective rate of tax on the £9m now not eligible for entrepreneurs’ relief would be 20 per cent as opposed to 10 per cent.)

:: Pensions and the annual allowance charge – there has been much media coverage and controversy around the annual allowance charge. From April 6 the rates at which the charge is applicable have been significantly increased from £110,000 to £200,000. This removes everyone with adjusted income in 2020/2021 in excess of £200,000 out of the charge and will be a welcome move for high earners. The pensions lifetime allowance has increased to £1,073,100 from £1,055,000.

There was good news for employers as the employment allowance will increase from £3,000 to £4,000 from next month, which should benefit around 65,000 businesses.

Finally, although it was confirmed that the corporation tax rates will remain at 19 per cent, a number of other reliefs were increased including an increase in the structures and buildings allowance from 2 per cent to 3 per cent and an increase in Research & Development (RDEC) from 12 per cent to 13 per cent.

:: Baker Tilly Mooney Moore (www.bakertillymooneymoore.co.uk) provides accountancy and business advisory services to clients in the private, public and voluntary sectors including audit & assurance, taxation, restructuring & insolvency and consulting.