Budget 2020: The REAL News (well, my quick thoughts)

As always, a lot of the tax detail gets buried in the Chancellor's budget day speech, we get lots of little sound bites about tax on beer and such, but little detail on the big movements.

So, what devil has our new Chancellor, Rishi Sunak, left in the detail for us to extract...

We have of course seen the MASSIVE shift in entrepreneurs relief. Now, I'm not claiming any Nostrodamus level foresight here, as I think most of the profession guessed the most likely movement here would be a reduction in the lifetime allowance rather than a full abolition of the relief. This will see the government will introduce legislation in Finance Bill 2020 reducing the lifetime limit on gains eligible for Entrepreneurs’ Relief from £10 million to £1 million for qualifying disposals made on or after 11 March 2020.

We also saw the MONUMENTAL give away of £104.16 per annum as a result of the National Insurance limit increase. Yes, I am being sarcastic, as I do get annoyed by things like this when politicians crow about it as if giving people an extra £2 a week is like them winning the lottery!

Something many might have missed will be the change to the tapered annual allowance for pensions . The two tapered annual allowance thresholds (currently £110,000 and £150,000) will each be raised by £90,000, and the minimum tapered annual allowance will be decreased from £10,000 to £4,000 from 6 April 2020. So, from 2020 to 2021 and subsequent years the threshold income limit, the point at which an individual is assessed for the taper, will be £200,000, and the adjusted income limit, the point at which the annual allowance begins to reduce will be £240,000. Many business owners (and government employees no doubt) will welcome these changes following recent difficulties after the tapering rules were brought in.

There's a load of other stuff in the OOTLAR - Overview of Tax Legislation and Rates, which can be found here (https://bit.ly/2U0OqGQ), happy reading!

Loan Charge - Where are we?

A lot of what I will post here is direct from HMRC's recently published guidance last week (it's here if you really want to read all of it)on the upcoming changes to the loan charge following the review by Sir Amyas Morse late last year. The review was published on 20 December 2019 along with the government’s response to it. The government announced that it would accept all but one of the review’s recommendations. The measures announced will include the following changes to the loan charge:

• it will only apply to outstanding balances of disguised remuneration loans made between 9 December 2010 and 5 April 2019 inclusive;
• it will not apply to loans made in tax years before 2016 to 2017 where a reasonable disclosure of the use of a disguised remuneration tax avoidance scheme was made within the relevant tax return or, where appropriate, associated documents, and HMRC failed to take any action (for example by opening an enquiry);
• those affected by the loan charge will be able to elect to split their loan balance over 3 consecutive years - 2018 to 2019, 2019 to 2020 and 2020 to 2021;
• late payment interest will not be payable for the period 1 February 2020 to 30 September 2020 on any Self Assessment liability as long as a return is filed and the tax paid, or an arrangement made with HMRC to do so, by 30 September 2020;
• moving the date by which the additional information form must be returned to HMRC from 1 October 2019 to 1 October 2020 - the form requires customers to provide full information to HMRC relating to any outstanding disguised remuneration loans which they will need to make tax payments for.

It is important to note that these measures will have effect retrospectively to 5 April 2019, which is the relevant date for the purposes of applying the loan charge.

If you have any questions about these changes please contact HMRC's loan charge review team by email:  loanchargeconsultationresponses@hmrc.gov.uk.