The UK’s first-ever Budget as a non-EU state will take place on Wednesday 11th March. It’s also the first one since Boris Johnson became our Prime Minister, with new Chancellor Rishi Sunak delivering it.
The government initially said the Budget would focus on ‘levelling up’ the UK economy. However, it’s now rumoured that some of the originally intended announcements may be postponed until the Autumn Statement.
With the coronavirus outbreak currently dominating headlines, the Spring Budget may instead be fixated on protecting Britain in relation to this – both from it spreading and from a financial standpoint.
Either way, we still expect tax announcements related to SMEs to be mentioned. Here, we detail our predictions for this year’s Spring Budget.
Support for impacted businesses
COVID-19 is now at an SOS alert. If the threat continues and more people self-isolate, the government may have to step in and help those businesses struggling with a lack of customers – and therefore cash flow in the short-term. Potentially, these enterprises may be given a longer period to pay their due taxes.
For small businesses in particular, there may also be support if the coronavirus outbreak means staff need time off or experience financial difficulties.
Pension tax relief
At present, the pension tax relief is at the taxpayer’s income tax rate. Basic rate taxpayers receive 20%, and higher rate receive 40%. However, this could change to a flat pension tax relief rate at 20% leaving higher earners at a disadvantage.
We may also see a pension dashboard launched allowing taxpayers to track the amount they’re saving more easily and have an overview of all their pensions in one sole place.
National Insurance contributions (NICs)
Boris Johnson’s conservative leadership campaign pledged a tax reduction for higher taxpayers. However, when he called a snap general election for December 2019, the focus changed.
Now, it’s about increasing the threshold for NICs to £9,500 in April 2021, and then to £12,500 in later years. This would ultimately mean paying less tax, as there’s a higher tax threshold.
Entrepreneurs’ relief, a UK tax scheme designed to incentivise people to grow a business, is anticipated to reduce. Currently, business owners pay less Capital Gains Tax (CGT) when they sell their business, but this could be restructured to only apply to SMEs – as well as the chance it might be obliterated altogether.
The Spring Budget could also see announcements relating to fuel duty cuts, with the specific aim to help road hauliers who could potentially be disrupted by the aftermath of Brexit in 2021.
With so many factors impacting the UK economy, it may be that the announcements made at the Spring Budget could affect your small business. However, this doesn’t need to be a time of fear.
Here at Nabarro Poole, we’re well-versed in helping SMEs navigate their business – and their finances – through uncertain periods. From management accounts and tax planning to budgeting and forecasting, we’ll do what it takes to support your enterprise and ensure its success.
If you’d like to know more about how we could give your accounts a boost, simply fill out our contact form today.