Upcoming tax changes 2020

10th January 2020 Nicky Cole
Tax Changes

Following the general election the government has a big majority to push its tax changes through parliament. How might this affect you and your business?

Brexit. It’s now beyond reasonable doubt that the UK will start the EU exit process on 31 January 2020. We use the word “start” advisedly because, negotiations on trade, and consequently VAT and customs arrangements with the EU will not be complete or take effect before 31 December 2020 at the earliest. If an agreement isn’t reached by then there might still be a no-deal or partial-deal exit from the EU.

While negotiations are ongoing existing customs and VAT arrangements will apply. So until further notice it’s “as you were” for VAT and customs.

IR35 – Off-payroll working is another hot topic. Shortly before the election the Chancellor alluded to a review of IR35 , presumably including the changes due to take effect in April 2020.

While the prospect of a review is welcome, for the time being you should work on the basis that the changes due in April will go ahead. We’ll let you know if that there are any timetable alterations.

Other taxes – The government’s manifesto promised an unspecified increase to the NI employment allowance for employers. Currently it can reduce an employer’s NI bill by up to £3,000 per year. Employees will also have their NI bills cut. They’ll only pay NI to the extent their annual pay exceeds the rate of £12,500 per year (£1,042 per month), rather than the current £8,632 per year (£720 per month). There may be changes to pensions tax relief following recent press highlighting a tax trap for NHS doctors and other higher earners. For these changes and more watch this space.

Budget – No date has yet been announced for the Budget to replace the one in November 2019 which was cancelled. We expect one sooner rather than later, after which the government’s tax strategy should be clearer.

You won’t have to worry about the VAT and customs changes that would have occurred with a no-deal Brexit. They are delayed until at least the end of 2020. An IR35 review is on the cards but follow the existing rules for now.
If you would like more advice on tax, give us a call!

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