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Personal Tax and Miscellaneous Matters
This article outlines changes to Statutory Sick Pay (SSP), Local Authority Hardship Fund, Personal Tax allowance, Income Tax bands, rates and the dividend allowance, Earlier payments of Capital Gains Tax (CGT), Capital Gains Tax Private Residence Relief changes and more.
Statutory Sick Pay (SSP)
SSP will be temporarily payable from day 1 instead of day 4 for affected individuals and will include those infected and those self-isolating, who are not infected.
Those who cannot claim SSP, the self-employed for example, are to be provided with easier access to Universal Credits and the Contributory Employment and Support Allowance.
Local Authority Hardship Fund
Government is providing a new £500m Hardship Fund so local authorities can support economically vulnerable people and households.
Most of this funding will probably support the extension of council tax relief.
Personal Tax allowance
The personal Income Tax allowance for 2020-21 is maintained at £12,500 (2019-20 £12,500).
Income Tax bands, rates and the dividend allowance.
The Income Tax bands for 2020-21 have also been maintained at 2019-20 levels. They are:
- Basic rate band £37,500 (2019-20 £37,500)
- Higher rate band £37,501 to £150,000 (2019-20 £37,501 to £150,000)
- Additional rate, no change, applies to income of more than £150,000.
Consequently, the higher rate threshold will stay as £50,000 from April 2020. There is no change in Income Tax rates, and the tax rates applied to dividend income.
Changes to these Income Tax bands apply to England, Wales and Northern Ireland. The Scottish parliament now set their own Income Tax bandings.
Earlier payments of Capital Gains Tax (CGT)
As previously announced, from April 2020, UK residents will be required to make a payment on account for CGT due on a chargeable residential property sale. For example, the sale of a buy-to-let property. A formal computation of any gains and payment of CGT due on the disposal will have to be made within 30 days of the property disposal.
The changes have applied from April 2019 for non-UK residents.
Capital Gains Tax Private Residence Relief changes
From April 2020, the government is making two changes to the private residence relief:
- The final exempt period will be reduced from 18 months to 9 months, with no change to the 36 months available for those disabled or in care homes, and
- Lettings relief will be reformed so that it only applies in certain circumstances where the property owner is in shared occupancy with the tenant.
CGT Entrepreneurs’ relief
One of the significant announcements in the budget speech was the reduction of the lifetime allowance for this relief from £10m to £1m. This will apply to all relevant business disposals on or after 11 March 2020. The Chancellor has avoided the abolition of the relief but has restricted lifetime claims to £1m.
Special provisions may apply to disposals contracted for sale before 11 March 2020, but when the sale was not completed at that date.
Business owners and their advisors will need to consider other options to reduce CGT on business sales in excess of this £1m limit.
CGT annual allowance
The annual tax-free allowance is to be increased to £12,300 for 2020-21 (£12,000 2019-20).
The equivalent allowance for trustees is £6,150 (£6,000 2019-20).
Tax benefit charges for low CO2 vehicles
In an attempt to support new regulation in this area, the listed benefit rates will be cut by 2% for vehicles that qualify for the new standard (Worldwide harmonised Light Vehicle Test Procedure (WLTP) for all new cars registered from 6 April 2020).
Tobacco Duty Rates
All tobacco products will see an increase in duty by 2% above the current rate of inflation.
Hand-rolling tobacco will see an increase of 6% above the rate of inflation.
These changes will impact prices from 6pm, 11 March 2020.
Vehicle Excise Duty
Rates are due to be increased in line with the Retail Prices Index from April 2020.
Is frozen for another year.
Alcohol duty rates
Alcohol Duty rates remain unchanged for 2020-21. This will be welcome news for pubs and bars.
ISA limits 2020-21
Adult savings limits remain unchanged at £20,000.
Junior ISA limits are increased to £9,000.
Zero-rating of VAT for women’s sanitary products
This measure is to be introduced from 1 January 2021.
Bank support from mortgage lenders
Although not a budget announcement, a number of banks and other mortgage lenders are offering a moratorium on mortgage repayments to those directly affected by the Coronavirus. This is welcome support for individuals whose income may be diminished by absence from work. At least one High Street lender has committed to a three-month moratorium.
Banks are also considering increasing credit card limits and cash withdrawal limits.