How will the new budget for 2020 affect your business?

Below are some of the key points that may be useful to you

Entrepreneurs relief under Capital Gains Tax restricted

Until this budget, if you sold your business you were entitled to pay a lower rate of Capital Gains Tax of 10% (compared to 20% once you hit the higher rate tax band) on the first £10m of the sale.

This has always been a well talked about topic and now has been passed, a reduction in the lifetime limit from £10m to £1m.

Chargeable Gains for companies and Corporation Tax

The rate of 19% is set to be held for 2020 & 2021, however, there is now a cap on how much capital losses can be set of against chargeable gains, from April 2020 only 50% of gains may be offset by capital losses.


Capital Gains Tax Payment

There are much stricter rules in place now on when any capital gains tax arising is due. Any chargeable gain arising is due to be paid within 30 days of completion of transaction as opposed to when self-assessment tax is due.

Zero-Emission Cars vs company cars

When a business provides a car to an employee, the tax due is calculated as a % of the car’s list price.

From 6 April 2020 the car benefit charge for carbon dioxide emissions will be based on the Worldwide Harmonised Light Vehicle Test Procedure (WLTP). The appropriate percentages for most cars whose CO2 emissions are determined under the WLPT are reduced by two percentage points. The means that where a car registered prior to 6 April 2020 would have an appropriate percentage of 8%, the appropriate percentage for a car registered on or after that date would be 6%. 

Employment allowance increase

There has been increase in the employment allowance.  This covered and offsets the first £3,000 of employer’s national insurance a business occurred in previous years.  This has increased to £4,000 from April 2020.

Some positive news is that the Government has promised more time to pay taxes although nothing concrete on this yet.  It is likely business will have to appeal for time to pay agreements with HMRC, but promises have been made that HMRC will be more lenient about these.

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