The tax implications of the March 2020 Budget

By Mike Chapman, Director of Corporate Tax

Chancellor of the Exchequer Rishi Sunak announced his Budget to Parliament on Wednesday 11 March, the wider implications of which are sure to impact upon SMEs across the UK.

This budget has come at a rather interesting and complicated time, and included some rather interesting and complicated announcements, but fortunately the tax elements of it weren't really among them. Most of the tax changes were either announced earlier, or are following on from recent moves and so don't change the position a great deal. Certainly, most of them are small beer compared to the changes to business rates, and perhaps the National Living Wage.

Entrepreneur's Relief

There are some exceptions. Entrepreneur's Relief has been cut to cover only £1 million of gains which is better than complete abolition, but rather harsher than many hoped for – especially as the anti-forestalling rules mean that people who were trying to hedge their bets slightly will often be disappointed. This may well be a lesson for the future: if you think tax rules might change then you need to take firm action, as dithering will just give you the worst of both worlds.

Pension tapering

The extension of pension tapering is notable for being a relaxation of the rules without any of the tightening that has been rumoured for the past few years. Changes to Structures and Buildings Allowances, NIC allowances and Research and Development Expenditure Credit (RDEC) are not very exciting, but are certainly welcome. 

Hints for the future

Otherwise the main message seems to be around flagging up areas the Government is interested in for future consideration. Clearly someone is quite excited by the opportunity to change VAT rates, the SDLT surcharge is another dig at overseas purchasers, and it's interesting to see that HMRC are increasingly wanting other people to do their work for them. Local authorities are going to have to check people are registered for taxes, large businesses will have to flag their own issues for enquiry, and tax advisers are going to be reminding HMRC that cross-border tax can be complicated. Fortunately, of course, the question of 'raising standards of tax advice' can have no impact on UK200 Group members.

Mostly business as usual

Overall, it seems to be mostly business as usual on the tax side, but it'll be interesting to see how things pan out over the next year or two.

If you'd like to speak with one of the Knill James tax team about the Budget, please call us on 01273 480480 or email mike@knilljames.co.uk.