Budget 2020 – Analysis

We summarise the main tax policy announcements in the government's first budget of 11 March 2020.

Personal Tax

Income Tax and National Insurance

• As previously announced, the threshold at which National Insurance contributions will start to be paid will rise to £9,500. 
• There were no new announcements on income tax, national insurance or VAT, which is unsurprising given the Conservative Party’s manifesto pledge to uphold the “triple lock”. 

Capital Gains Tax (CGT)

• The annual exempt amount for CGT has been increased from £12,000 to £12,300 in April 2020.
• As was widely expected, the Government has introduced changes to Entrepreneurs' Relief (ER).  As a brief overview, ER reduces the applicable rate of CGT on disposals of certain business assets from 20% to 10%, subject to a lifetime limit on capital gains eligible for ER.
• The lifetime limit has been significantly reduced from £10 million to £1 million.  
• This change has been introduced with immediate effect, which means that the new lifetime limit of £1 million will apply to disposals taking place on or after 11 March 2020.

Inheritance Tax (IHT)

• Interestingly, there were no announcements in relation to IHT.  There have been two recent reports into IHT reforms by the Office of Tax Simplification and the All-Party Parliamentary Group on Inheritance and Intergenerational Fairness, both of which suggested fairly radical reforms to IHT.  It may be the case that the Government decides to review and consult on the recommendations made in both reports, we will see if any changes to IHT are introduced in the Autumn budget.

Stamp Duty Land Tax (SDLT)

• A surcharge of 2% for non-UK resident buyers of residential properties in England and Wales will be introduced from April 2021. The money raised from the surcharge will be used to help address rough sleeping

Business Tax

Corporation Tax

• As previously announced, corporation tax will remain at 19%. 

Tax Avoidance and Compliance

• There was also a focus on increasing tax revenue and tackling the promoters of tax avoidance schemes.
• There will be investment in additional compliance officers and new technology for HMRC, with the aim of reducing the tax gap through additional compliance activity and expanding debt collection capabilities.
• The Government will also legislate to take further action against those who promote and market tax avoidance schemes and will publish a new strategy for tackling the promoters of such schemes.
• Separately, there will also be a call for evidence in the Spring on raising standards for tax advice in order to give taxpayers more assurance that the advice they are receiving is reliable.