Although the BFA are not alone in voicing their opinion about Business rates its obvious that writing to Ministers on a regular basis along with possibly hundreds of other small business has received some attention. We have included in the Budget news some of the most relevant issues.
The Chancellor Rishi Sunak presented his first Budget on Wednesday 11 March 2020. In his speech he stated ‘we are at the beginning of a new era in this country. We have the freedom and the resources to decide our own future’. ‘It is a Budget of a government that gets things done’. Our summary focuses on the tax measures which may affect you and your business
Other measures include:
- an increase and extension of business rates discounts
- extended access to Statutory Sick Pay due to coronavirus.
Previously announced measures include:
- the increase to the National Insurance thresholds
- the introduction of off-payroll working for the private sector
- changes to Principal Residence Relief.
Business rates have been devolved to Scotland, Northern Ireland and Wales. The government has already announced that, for one year from 1 April 2020, the business rates retail discount for properties with a rateable value below £51,000 in England will increase from one third to 50% and will be expanded to include cinemas and music venues. To support small businesses in response to COVID-19, the retail discount will be increased to 100% and expanded to include hospitality and leisure businesses for 2021.
The government is launching a fundamental review of business rates to report in the autumn. A call for evidence will be published in the spring.
National Living Wage (NLW) and National Minimum Wage (NMW)
Significant increases in minimum wage rates take effect from 1 April 2020. The NLW, which is the rate for workers aged over 25 years, increases by 6.2%. The government states this equates to an annual pay rise of up to £930 for a full time worker. From 1 April 2020, the new hourly rates of NLW and NMW are:
- £8.72 for those over 25 years old
- £8.20 for 21-24 year olds
- £6.45 for 18-20 year olds
- £4.55 for under 18s
- £4.15 apprentice rate for apprentices under 19, and those 19 and over in their first year of apprenticeship.
National Insurance thresholds
The government has recently announced National Insurance thresholds for 2020/21. Most thresholds will rise with inflation. Two thresholds, however, will rise by 10% from £8,632 to £9,500:
- the primary threshold – which sets the level at which employees start to pay Class 1 National Insurance contributions (NICs)
- the lower profits limit – which sets the level at which the self-employed start to pay Class 4 NICs.
The upper thresholds which apply to these two classes of NICs remain at £50,000.
The secondary threshold, which sets the level at which employers pay the main rate of NICs, only rises in line with inflation.
One-off grant for small businesses
The government is to provide a £3,000 grant to businesses that presently qualify for the Small Business Rates Relief or Rural Rate Relief.
Businesses that think they may be eligible should contact their local authority.
The present £3,000 relief that reduces employer’s NIC contributions is to be increased to £4,000 from April 2020. From 6 April 2020, you will only be able to claim if your Class 1 NIC bill was below £100,000 in the previous tax year.
VAT registration threshold – no change
The present VAT registration limit (£85,000) and deregistration limit (£83,000) will continue to apply for a further two years; until 31 March 2022.
Intangible fixed assets
The government has announced an extension to corporation tax relief for intangible fixed assets. All pre-Finance Act 2002 intangible assets acquired from 1 July 2020 will come within the intangible fixed asset regime, subject to certain transitional provisions.
Corporation tax rates
Corporation tax rates have already been enacted for periods up to 31 March 2021.
The main rate of corporation tax is 19%. The rate for the Financial Year beginning on 1 April 2020 was due to fall to 17% but the Chancellor has announced the rate will remain at 19%.
Van benefit charge nil-rating for zero emission vans
From April 2021, the government will apply a nil rate of tax to zero-emission vans within the van benefit charge.
Plastic Packaging Tax
This will be a new tax that applies to plastic packaging produced in or imported into the UK that does not contain at least 30% recycled plastic. The tax rate will be £200 per tonne of non-compliant plastic packaging. A consultation on the design and implementation of the tax has been issued and the tax is to take effect from April 2022.