The 2020 budget has been long awaited. Delayed due to Brexit shenanigans, scuppered by a general election, complicated by a change of chancellor and then almost entirely wiped out by a global pandemic, this has been a hard one to get across the line. Across the line it is and Rishi Sunak did an admirable job. So what does it all mean for you hard working self employed folk out there? Let’s find out!
Getting it done
There’s no getting away from the fact that this was always going to be a good news budget. We’ve just about recovered from the 2008 crash, austerity is over, the general government deficit is at an all time low, employment is at an all time high and GDP is steadily rising. Having said that we’ve had almost four years of Brexit distractions, two general elections, a recent change of chancellor and of course the outbreak of a global pandemic, Covid-19. So all things considered this was never going to be an easy task. Well done to Rishi Sunak! Now let’s get it done.
Budget 2020 – key points for the self employed
- Business rates suspended for properties with a rateable value under £51,000, for retail, cinemas, music venues, hospitality and leisure businesses until 2021
- £3,000 business rate grant for businesses who qualify for small business rate relief (SBRR)
- Target for the National Living Wage (NLW) to be increased to two thirds of median earnings, expected to be over £10.50/hr, by 2024
- Class 4 National Insurance threshold increased to £9,500
- Business start-up loans – extending funding of the British Business Bank’s Start-Up Loans programme to the end of 2021-22
- An investment of £10m to increase Growth Hub capacity
- Entrepreneurs’ relief down from £10m to £1m
- Tax incentives removed for red diesel (i.e. no more red diesel) for certain sectors
- Reading tax (VAT on e-books etc.) abolished
Tax rate comparisons for 2019/20 vs 2020/21
- Personal allowance: £12,500 (no change)
- Basic rate tax (20%) up to: £50,000 (no change)
- Higher rate tax (40%) up to: £150,000 (no change)
- Personal Savings Allowance: £1,000 (no change)
- Trading Allowance: £1,000 (no change)
- Property Income Allowance: £1,000 (no change)
- Class 2 National Insurance (NI) threshold: £6,475 (up from £6,365)
- Class 2 NI rate: £3.05 per week (up from £3 per week)
- Class 4 NI threshold: £9,500 (up from £8,632)
- Class 4 NI standard rate: 9% (no change)
- Class 4 NI higher rate: 2% (no change)
- VAT threshold: £85,000 (no change)
- Standard VAT rate: 20% (no change)
- Annual Investment Allowance (AIA) limit: £1m (no change)
- Cash Basis limit: £150,000 (no change)
- State Pension age: 67 (no change)
- State Pension qualifying NI years: 35 (no change)
Please note, all figures subject to change and verification. Pending publication of final figures from HMRC.
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Last Updated on 11 March 2020 by Andy Mac