NEW TAX YEAR 20/21 – HIGHLIGHTS ROUND-UP
Not surprisingly, today’s Budget contained confirmation that plans for IR35 reforms would go ahead. There are just under 4 weeks for contractors, agencies and end hirers to prepare, so please get in touch to find out how we can help. Here’s our round-up of the key headlines for contractors and small business owners:
- The off-payroll reforms to IR35 go ahead, and if you’re impacted by them, speak to us about the steps you can take, including working through our umbrella company. Entrepreneur’s Relief has not been completely abolished after all, so if you were not sure about the future of your PSC, you can now take the time to consider your options.
- There are slight changes to tax thresholds as usual, and corporation tax remains at 19% as expected. The coronavirus measures may impact you if you are working on an employed basis, but for most Gig-economy workers, your self-employed status will mean that these don’t make a difference to your situation.
- Rishi Sunak said he expected coronavirus to have a ‘significant’ but ‘temporary’ impact on the UK economy. ‘People will return to work. Supply chains will return to normal,” he said. The Office for Budget Responsibility had forecast growth without fully accounting for the impact of coronavirus to slow down, with 1.1% growth in 2020 and 1.8% in 2021.
- Extraordinary measures represent £7bn to support the self-employed, businesses and vulnerable people.
- NHS to have extra resources during the coronavirus outbreak.
- Employers to pay statutory sick pay from day one, rather than day four – businesses with fewer than 250 employees will receive Government funding of SSP
- Coronavirus loan scheme for small businesses to cover the cost of salaries and bills
- £3,000 cash grant per business for any firm that is currently eligible for the small business rates relief
- Eligible retail, leisure and hospitality businesses with a rateable value below £51k will pay no business rates
The Budget also included announcements that:
- Entrepreneurs’ Relief to be retained, but lifetime allowance will be reduced from £10m to £1m
- Corporation tax will remain at 19%, as previously announced
- National Insurance threshold to be increased from £8,632 to £9,500
- More than £600bn to spent on roads, rail, broadband and housing by the middle of 2025 with £2.5bn made available to fix potholes and resurface roads.
- Taxes on alcohol, fuel were not increased but plans were announced to increase taxes on pollution including a new plastics packaging tax and financial support for the rollout of new car charging hubs.
- Flood defences also got increased funding
- Diesel tax relief scrapped