Covid-19 Tax Giveaways and Other Developments
The Spring Budget was held on 11 March and Chancellor Rishi Sunak made clear it was being delivered against the backdrop of the Covid-19 pandemic. He announced plans to support public services, individuals and businesses potentially affected by the pandemic.
Nothing particularly radical was announced, however, the Covid-19 situation has continued to accelerate at speed, and a subsequent raft of unprecedent emergency financial measures have been announced by the chancellor. Here’s a roundup of key tax-related announcements and developments to note.
Business support
Covid-19-related tax announcements targeted at businesses who face increased costs of cashflow issues include:
· Expanded business rates reliefs
· A coronavirus business interruption loan scheme to support up to a further £1bn lending to SMEs
· A £2.2bn grant scheme for small businesses
· A dedicated helpline for those needing a deferral period on their tax liabilities giving businesses a time-limited deferral period on HMRC liabilities owed and a pre-agreed time period to pay these back
· HMRC will waive late payment penalties and interest for businesses experiencing administrative difficulties contacting HMRC or paying taxes
Also, announced:
· A review of business rates
· An increase in the rate of R&D tax credits from 12 per cent to 13 per cent
· The structures and buildings allowance rate available for qualifying investments to construct new, or renovate old, non-residential structures and buildings will be increased from 2 percent to 3 percent from this April
· A technical change to the digital services tax (DST), effective from April 1, has amended the payment schedule from quarterly to annually
· A new plastic packaging tax
· Further measures to crack down on tax abuse in, for instance, the construction industry, illicit tobacco, and those who promote tax avoidance schemes
· The introduction of the PAYE cap on the payable tax credit in the SME R&D schemes is delayed to 1 April 2021
Personal
· The primary threshold and lower profit limits for NICs are increased to £9,500 from around £8,600
· The lifetime limit for entrepreneurs’ relief is reduced from £10m to £1m
VAT and consumptions
· E-publications are to be zero rated
· Tampon tax is abolished
· Fuel duty is frozen (for the 10th consecutive year)
· All alcohol duties are frozen
Property tax
· A 2 per cent SDLT surcharge on non-UK residents buying residential property in England and Northern Ireland will come into force from 1 April 2021
· The small retailer discount for business rates has been increased from 33 per cent to 50 per cent for next year and will apply to shops, cafes, restaurants, cinemas, and music venues with property values (for property tax purposes) of less than £51,000
· Reflecting the Covid-19 impact, there will be a £1,000 discount for pubs with property values (for property tax purposes) of less than £100,000 for the next year
COVID-19 emergency tax measures
IR35
On 23 March, the chancellor announced that the extension of IR35 reform to the private sector will now be postponed by a year to 6 April 2021.
Businesses
There will be a 100 per cent business rates holiday for all retail, hospitality and leisure businesses in England for the next 12 months, regardless of their rateable value.
VAT
Businesses will not be expected to make any VAT payments in the period 20 March to 30 June 2020. They will be given until the end of the 2020/21 tax year to pay any liabilities for this period (this will be automatic).
Income tax
All income tax payments due from the self-employed under self-assessment will automatically be deferred to January 2021.
Readers should remain alert to further announcements to ensure they are aware of the latest developments.
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