News added on 13.03.2020

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Budget

Budget highlights 2020

The Chancellor delivered a long-awaited Budget that promises to lay the foundations of the UK’s future prosperity. What are the key tax announcements to be aware of?

Capital gains tax. Thankfully entrepreneurs' relief was not axed, but the lifetime limit has decreased from £10m to £1m. This change took immediate effect and can also apply to contracts entered, but not completed before 11 March 2020 unless the purpose was for commercial reasons. Affected individuals are urged to seek tax advice.   

Pensions annual allowance.  In recognition of the impact of the tapered annual allowance for pensions, particularly within the NHS, tapering will apply to those with adjusted income over £240,000 instead of £150,000. The minimum tapered annual allowance will decrease from £10,000 to £4,000 from 6 April 2020. Those with adjusted income between £150,000 and £240,000 will be able to make pension contributions up to £40,000 per annum from 6 April 2020, which would have been restricted previously.

Pensions lifetime. The lifetime allowance for pensions will increase in line with CPI, rising to £1,073,100 for 2020/21. 

Chargeable event gains.  Following a recent First-tier Tribunal case, the government will legislate in Finance Bill 2020 to put beyond doubt the calculation of top slicing relief by specifying how allowances and reliefs can be set against life insurance policy gains. This measure will apply to all relevant gains occurring on or after 11 March 2020.

Employers' NI. The employment allowance will increase from £3,000 to £4,000 from April 2020.

Flat rate deductions. The maximum flat rate income tax deduction available to employees to cover additional household expenses under homeworking arrangements will increase from £4 to £6 per week from April 2020.

Corporation tax. Corporation tax rates will remain static at 19% until 1 April 2022.

Capital allowances. The annual rate of the structures and buildings allowance will increase from 2% to 3% from April 2020.

VAT.  Legislation will be introduced to apply a zero rate of VAT to e-publications such as e-books, e-newspapers, e-magazines and academic e-journals. This change will take effect from 1 December 2020. The online publications were previously standard-rated, meaning that consumers were charged 20% VAT to read online rather than on paper.

The full details can be found here.

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