SPRING BUDGET 2020

This Budget was the first delivered by Rishi Sunak, the Chancellor, that wasn’t dominated by managing the pandemic, although the impact of the coronavirus was still front and centre in the policy decisions taken

Summary

The UK’s 2020 Budget has been announced today, with Chancellor of the Exchequer Rishi Sunak introducing a number of changes to the UK tax system. The most important points to be aware of are:

• The Entrepreneurs’ Relief lifetime allowance is to be cut from £10m to £1m, effective from today. Changes to this relief were anticipated and will affect business owners and entrepreneurs looking to sell a stake in their business. New rules have been introduced which, broadly, prevent the previous £10m limit from applying to sales where the contract was exchanged before 11 March with completion delayed until a later date for tax reasons, or for transactions between connected parties that are not wholly commercial.
• A new SDLT 2% surcharge is to be introduced for non-residents purchasing residential properties in England and Northern Ireland. The new rates will only apply to purchases after April 2021, rather than being immediately effective. The new rules are not expected to apply to purchases which complete before 1 April 2021, or where contracts were exchanged before 11 March 2020 with completion after 1 April 2021, subject to certain conditions.
• No updates or changes to Inheritance Tax have been made yet despite two consultations and a recent report.
• Research and Development tax credits are set to be increased for a number of sectors.
• VAT is to be abolished on sales of e-books and digital publications.
• Corporation Tax is to be frozen at 19%.
• Further measures are being introduced to clamp down on aggressive tax avoidance, evasion and non-compliance and HMRC’s budget is set to be increased to help counter this.
• The Government is consulting on making changes to the tax and regulatory treatment of alternative asset holding companies. Of particular interest is the Government’s review of the VAT to treatment of fund management fees and the permanent establishment and tax residence rules that apply to certain fund structures.
• The Government is to review the Enterprise Management Incentive scheme, which provides employees with an equity stake in their employer in a tax-advantaged way.
• Changes are to be made to pensions allowances for higher earners.