The Election Results And Tax
Now that Boris Johnson and his Conservative party have won the General Election will we finally “Get Brexit Done”? More importantly, can the Government now get on with running the country and sorting out urgent issues such as the NHS? Let's talk about the election results and tax.
The budget will take place on Wednesday 11 March 2020. It is likely to include some of the tax measures included in the Conservative Party election manifesto. The manifesto promised that there will be no changes to the rates of income tax, national insurance or VAT.
The manifesto stated that the corporation tax rate would remain at 19% instead of reducing to 17% on 1 April 2020 to provide an extra £6 billion for the NHS. Businesses would however benefit from a planned increase in the structures and buildings allowance from 2 per cent to 3 per cent. That allowance provides tax relief for the construction or renovation of commercial buildings.
The manifesto also announced that the national insurance threshold would be raised to £9,500 in 2020/21, from the current £8,632.
The party’s ambition was to raise the threshold to £12,500 in line with the income tax personal allowance.
FINANCE BILL SHOULD NOW PROCEED
Now that the General Election is out of the way, the tax changes in the draft Finance Bill scheduled to take effect from April 2020 are now more likely to go ahead.
The key tax measures “in limbo” until legislated in Finance Act 2020 are:
- Extending the “off-payroll” working rules to the private sector
- Restricting R&D repayable credit for SMEs
- The proposed 2% reduction in P11d car benefits
- Limiting CGT private residence letting relief
If the changes to CGT private residence letting relief go ahead from 6 April 2020, it may be worth considering the disposal of a property that currently qualifies for this relief before 6 April 2020. The “off-payroll” working rules will almost certainly proceed, even if not from 6 April 2020, and thus businesses and workers affected should prepare for the planned changes. Contact us if you need help in assessing the likely impact on your business.