Business tax
Entrepreneurs’ Relief - from 11 March 2020 the lifetime limit on gains eligible for relief has been reduced to £1 million (from £10 million).
Capital allowances
- Structures & Building allowance (SBA) - the rate of relief for SBA will increase from 2% to 3%. The change will take effect from 1 April 2020 for corporation tax and 6 April 2020 for income tax.
- Capital Allowances for Business Cars - from April 2021 the first year allowance on zero emission vehicles will be extended, and writing down allowance (WDA) of 18% will apply to cars with emissions up to 50g/km.
Intangible Fixed Asset regime - legislation in Finance Bill 2020 will remove the pre-2002 exclusion from the Intangible Fixed Assets (IFA) regime. This means tax relief for the cost of acquiring corporate intangible assets on or after 1 July 2020 will be provided under a single regime, subject to restrictions to prevent tax avoidance.
Research & Development
- RDEC rate - the rate of the Research & Development Expenditure Credit (RDEC) will increase from 12% to 13% with effect from 1 April 2020.
- Preventing abuse of the R&D relief for small and medium-sized enterprises - following consultation last year, the introduction of the PAYE cap on the payable tax credit in the SME R&D schemes will be delayed until 1 April 2021. Further consultation will be made on changes to the cap’s design, to ensure it targets abusive behaviour as intended while ensuring that eligible businesses are able to access the relief.
- R&D tax credit costs - a consultation will be published on whether qualifying R&D tax credit costs should include investments in data and cloud computing.
Employment Allowance - the government will increase the Employment Allowance from £3,000 to £4,000 from April 2020.
Corporation tax rate - it was confirmed that the rate of corporation tax will remain at 19% in 2020.
Digital Services Tax (DST) - as previously announced, a new 2% tax will be introduced on the revenues certain digital businesses earn from 1 April 2020. Legislation will require businesses to pay the DST on an annual basis. The government will repeal the DST once an appropriate global agreement on digitisation is reached.
Corporate capital loss restriction - As previously announced, from 1 April 2020 the proportion of annual capital gains that can be relieved by brought-forward capital losses will be restricted to 50%.This measure includes an allowance that gives groups unrestricted use of up to £5 million brought-forward capital or income losses each year. Certain companies in liquidation will be excluded from the scope of the restriction.
Review of the UK funds regime - a review of the UK’s funds regime will take place during 2020. This will cover direct and indirect tax, as well as relevant areas of regulation, with a view to considering the case for policy changes.
Apprenticeship Levy - a review will be undertaken of the working of the Apprenticeship Levy.
Review of Enterprise Management Incentives (EMI) scheme - a review will be undertaken of the EMI scheme to make sure it is achieving its policy aims.
Consultation on aspects of the hybrid mismatch rules - a consultation will be published on the corporation tax rules that apply to hybrid mismatch arrangements that seek to exploit the differences in tax treatment between two jurisdictions.
Property tax
Stamp duty surcharge for non-UK residents - from 1 April 2021 a 2% Stamp Duty Land Tax surcharge will apply to non-UK residents purchasing residential property in England and Northern Ireland.
Business rates
- Discount scheme - for one year the business rates discount for retail properties, cinemas, and music venues will be increased to 100% for properties with a rateable value of less than £51,000. This 100% discount will be expanded to include hospitality and leisure businesses.
- Business rates pubs discount - a £5,000 business rates discount for pubs with a rateable value below £100,000 will apply in England for one year from 1 April 2020.
- Business rates local newspaper office space discount - the £1,500 business rates discount for office space used by local newspapers in England will be extended for an additional five years until 31 March 2025.
- Business rates review - a fundamental review of business rates has been launched. The result of the review will be published in the Autumn.
Personal tax
National Insurance lower earnings limit for workers - the threshold will rise to £9,500 from 6 April 2020.
Tax guidance for self-employed people - new interactive online guidance for taxpayers with non-Pay As You Earn income will be released in the Summer.
Call for evidence on pension tax administration - a review of options for addressing tax relief differences will be published shortly.
Tapered annual allowance for pensions - the two tapered annual allowance thresholds will each be raised by £90,000 and the minimum tapered annual allowance will be decreased from £10,000 to £4,000 from 6 April 2020. From 2020 to 2021 and subsequent years the threshold income limit, the point at which an individual is assessed for the taper, will be £200,000, and the adjusted income limit, the point at which the annual allowance begins to reduce will be £240,000.
Indirect taxes
VAT
- Digital publications - a zero rate of VAT will apply to e-publications from 1 December 2020; this will include e-books, e-newspapers, e-magazines and academic e-journals.
- Women’s sanitary products - VAT on these products will be abolished from 1 Jan 2021.
Plastic packaging tax - from April 2022, a new Plastic Packaging Tax will charge manufacturers and importers £200 per tonne on packaging made of less than 30% recycled plastic to incentivise the use of recycled plastic in packaging.
Climate change levy - to equalise the rates and encourage energy efficiency, from April 2022 the levy on electricity will be frozen and it will be raised on gas for 2022/23 and 2023/24.
Red Diesel - the fuel subsidy that applies to red diesel and rebated biofuels will be removed from April 2022, except for agriculture (including horticulture, pisciculture and forestry), rail and for non-commercial heating (including domestic heating). The government will consult on whether the entitlement to use red diesel for other sectors is justified.
Duties - fuel and all alcohol duties have been frozen for a year.
Other provisions
Additional compliance resources for HMRC - the government is investing in additional compliance officers and new technology for HMRC. This investment is forecast to bring in £4.4 billion of additional tax revenue up to 2024-25 by enabling HMRC to further reduce the tax gap through additional compliance activity and expanding debt collection capabilities.
Large business notification - from April 2021 large businesses will be required to notify HMRC when they take a tax position which HMRC is likely to challenge. A consultation will be published on the details of the notification process.
Tackling promoters of tax avoidance - HMRC will publish a new strategy for tackling the promoters of tax avoidance schemes, and will also take forward further measures relating to marketed tax avoidance schemes. Draft legislation will be published in July 2020 and legislation will be introduced in Finance Bill 2020-21.
Targeted measures - new measures will target tax abuse in the construction industry, the hidden economy and trade in illicit tobacco.
Raising standards in the market for tax advice – a call for evidence will be published in the Spring on raising standards in the market for tax advice.
