Sajid Javid delivers his first Budget as Chancellor on 11 March 2020 following the 12 December 2019 general election. It is the first major financial statement after the UK has left the European Union and promises to be radical and far reaching in its scope and post-Brexit ambition.
The last Budget we had was on 29 October 2018 under Philip Hammond, which now seems a very long time ago.
There was a Spring Statement in March 2019, but that contained no tax announcements.
Draft clauses for the next Finance Bill were published in July 2019 for consultation by 5 September 2019. But this is a new government, so what has previously been announced may not now happen.
The annual Budget sets tax rates and allowances ahead of the next tax year, so is an important event in the annual calendar. And as income tax is a temporary tax, it has to be reintroduced every year.
In announcing the 2020 Budget, the Chancellor has said he will prioritise the environment, and build on recent announcements to boost spending on public services and tackle the cost of living. These include investing in new hospitals, training new police officers, funding vocational education and increasing the National Living Wage.
Bishop Fleming will be covering the Budget on the day to bring you up-to-date news on what is being proposed.
Sajid Javid has already said that he will scrap the proposed cut in the rate of corporation tax from April 2020. The rate is currently 19 per cent and was meant to drop to 17 per cent from 1 April. Legislation will be brought forward to stop this happening.
The Queen's Speech on 19 December 2019 outlined some of the key measures we can expect to see in the March Budget, including:
A major headache for large employers is the proposed further rollout of IR35 to the private sector from 6 April 2020. The draft clauses for this were published in July 2019 (off payroll working), but we have heard nothing since. Time is running out for clarity on the rules and the publication of guidance.
The rules have already been in place for the public sector since 2017, and many professional bodies have called for the private sector extension to be delayed for at least a year due to the short time frame in which to adapt to the changes.
The Chancellor has announced a review of off payroll working, so this could lead to the hoped-for delay.
The new rules would mean that medium and large-sized businesses will have to assess the employment status of any contractors they use where those contractors use their own personal service company.
If the business decides a contractor should be treated as an employee, it must deduct income tax and national insurance before paying the contractor.
Currently, contractors working through their own companies can decide their own status, so this is a major change, if it goes ahead.
ER is a valuable relief for business owners that allows them to reduce their capital gains tax liability when they come to dispose of their enterprise. It has been subject to a number of restrictions over the years, and further changes could be announced in the 11 March Budget.
In the Conservative Party manifesto it says the government will review and reform ER, but it is not yet clear what this means. Although such a review may lead to positive enhancements to the relief, the direction of travel has been to reduce its availability.
Tax Partner, Paul Morris, has previously considered what business owners could do to protect their CGT positions should ER be further restricted.
Having the Budget so late into the tax year will cause a problem for the Scottish Government.
A UK Budget on 11 March leaves MSPs with only a few days to react to the announcements and to agree what the rates and bands of Scottish Income Tax will be ahead of the start of the new tax year in April.
If MSPs fail to reach agreement, Scotland would revert to UK rates and bands of tax set by Westminster.
If you would like to discuss your tax affairs and how they may be affected by the forthcoming general election, please contact a member of our tax team, or your usual Bishop Fleming advisor.