As expected, the 2020 Spring Budget was heavily dominated by the issue of Coronavirus and of how to protect the economy against its effects.
But Chancellor Rishi Sunak also announced a few changes that will impact contractors, including that the working-from-home allowance will increase from £4 per week to £6 from April 2020. This wasn’t the only news for contractors. Richard Hepburn, Operations Manager at Gorilla Accounting, believes that the rumoured changes to entrepreneur’s relief were possibly not quite as harsh as some anticipated.
He said: “Entrepreneur’s relief lifetime limit is to be cut back from £10 million to £1 million. While this means that businesses sold at a profit of over £1 million will have to pay more tax, it’s important to note that it was just reduced and not removed all-together.”
Other announcements of interest in the Spring Budget include the National Insurance threshold for employees to be increased to £9,500 and the employers’ National Insurance allowance to rise from £3,000 to £4,000.
In addition to this, the statement also included less good news for limited company owners. The proposed reduction in Corporation Tax to 17% has been scrapped and will remain at 19%.
Contractors will also wonder about IR35. In the past, there was hope that, if more issues were highlighted within the public sector, the government might re-think the rollout to the private sector. However, this doesn’t seem to be the case; Mr Hepburn made sure to note that there was no mention of IR35 in the Chancellor’s speech.
He said: “However, the red book published after the budget confirms that the IR35 reforms will go ahead as expected from 6th April 2020.”
In regard to the Covid-19 outbreak, the Chancellor declared that everyone advised to self-isolate would be entitled to statutory sick pay; this is true even if they don’t have the symptoms of the disease.
Those who are self-employed and, therefore, not eligible, may still be able to claim contributory Employment Support Allowance.
Some of the other wider key points in the Budget:
Firms with fewer than 250 staff will be refunded for sick pay payments for two weeks
Business rates in England will be abolished for firms in the retail, leisure and hospitality sectors with a rateable value below £51,000
An extra £6bn in NHS funding over five years to pay for staff recruitment and start of hospital upgrades
The 5% ‘tampon tax’ will be scrapped
Fuel duty froze for the 10th year in a row
Extra £900m for research into nuclear fusion, space and electric vehicles
VAT on digital publications, including newspapers, e-books and academic journals to be scrapped from December
Over £600bn to be spent on roads, rail, broadband and housing by 2025