December’s general election delivered a Conservative government with a majority which should consign the knife-edge parliamentary battles of recent years to the past. So, what will the new government do, apart from “get Brexit done”?
Sajid Javid had announced the date of the budget as 11 March 2020. However, following his departure there is now speculation on whether the budget will be delayed. A look at the Conservative manifesto, gives some limited clues as to what we may expect:
Income Tax - There was a promise not to increase income tax rates – although it is worth remembering that this does not extend to Scotland and Wales, which can both set their own rates. While Boris Johnson had talked about an £80,000 higher rate threshold in his campaign to become party leader, this idea did not reach the manifesto.
Capital Gains Tax – There is mention of reviewing and reforming Entrepreneurs’ Relief. This relief is a 10% rate of capital gains tax which applies instead of the current 20% rate to qualifying disposals of interests in trading businesses and shares in unquoted trading companies.
National Insurance Contributions (NICs) – Again, a no rate increase promise also applies to NICs. However, this may prove difficult to square with the abolition of class 2 self-employed contributions, which has been deferred several times. The manifesto also promised an increase in the national insurance threshold to £9,500 in 2020/21 from the 2019/20 level of £8,632. However, the Government’s stated ambition is to ultimately raise the threshold to £12,500 (matching the current personal income tax allowance). The Employment Allowance (EA) also looks set to rise from £3,000 to £4,000 from April 2020.
Corporation Tax - The rate cut from 19% to 17%, which was legislated to take effect from April 2020, will no longer happen. The R&D tax credit rate is expected to increase to 13%, while the definition of R&D to be reviewed to support investment in cloud computing. There was mention of increasing the rate of Structure and Buildings Allowance to 3%.
The financial picture should be made clearer in March, when the long-overdue Autumn Budget will now be delivered. In the meantime, please do get in touch if you would like to discuss this.
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