Business - entrepreneurs' relief to be reduced

Corporation tax

The main rate of corporation tax will now remain at 19% from 1 April 2020, despite original plans to reduce this to 17%. This remains the lowest headline rate in the G20.

Additionally, it was announced that the main rate of corporation tax will be set at 19% for the financial year beginning 1 April 2021.

Employment allowance

With effect from April 2020, the employment allowance will increase from £3,000 to £4,000.

In contrast, access to the employment allowance will be restricted to employers whose national insurance contributions liability in the previous tax year was less than £100,000.

Structures and buildings allowance

From April 2020, the structures and buildings allowance (SBA) will increase from 2% to 3%.

The SBA came in from 29 October 2018 and aims to relieve the construction, renovation or conversion costs of non-residential structures and buildings used for qualifying purposes over their lifetime.

Businesses with chargeable periods spanning April 2020 can claim 2% a year for days in the period before April 2020 and 3% for days thereafter.

Research and development expenditure credit

The research and development expenditure credit, often referred to as the RDEC or ‘above the line credit', is rising from 12% to 13%, from 1 April 2020.

Capital allowances

The availability of first year capital allowances of 100% for zero-emission cars (as opposed to those cars not exceeding 50 g/km), zero-emission goods vehicles or equipment for gas refueling stations for use in the business will be extended from April 2021 to April 2025.

The main writing-down allowance of 18% will only apply to cars with emissions of up to 50g/km.

The special rate writing-down allowance of 6% will apply to cars with emissions above 50g/km. This is a reduction from the existing threshold of 110g/km.

The new 50g/km threshold will also apply for determining the lease rental restriction for the costs of hiring business vehicles for more than 45 consecutive days.

Research and development relief PAYE cap

The introduction of the PAYE cap on the payable tax credit in the SME research and development scheme will be delayed until 1 April 2021.

Off-payroll working rules

As previously announced, the Government has completed a review of the reform to off-payroll working in the private sector and, as planned, the rules will be implemented on 6 April 2020.

Deduction for home working

From April 2020, the flat -rate expense available to employees to cover additional household expenses, where they are required to work at home, will increase from £4 per week to £6 per week.

Business rates

There were a wide range of changes announced in relation to business rates.

It was already announced that from 1 April 2020, for one year, the business rates retail discount for properties with a rateable value below £51,000 in England will increase from one third to 50% and will be expanded to include cinemas and music venues.

In response to COVID-19, the retail discount will be increased to 100% and expanded to include hospitality and leisure businesses.

An increase from £1,000 to £5,000 business rates discount for pubs in England with a rateable value below £100,000 for one year from April 2020.

The £1,500 business rates discount for office space used by local newspapers in England will be extended for a further five years until 31 March 2025.

Entrepreneurs' relief

The lifetime limit on qualifying disposals eligible for the 10% tax rate is reduced from £10m to £1m for disposals made on or after 11 March 2020.

Any entrepreneurs' relief claimed on previous qualifying gains must be taken into account when establishing the extent of the lifetime limit still available.

There are special provisions for disposals entered into before 11 March 2020. In such cases, the disposal would be subject to the £1m cap, unless it can be demonstrated that the contract was not entered into to obtain a tax advantage and, where the parties are connected, the contract must have been entered into for wholly commercial reasons.

Enterprise management incentive scheme

A review into the enterprise management incentive scheme aims to ensure it continues to support high-growth companies to recruit and retain the best talent, and examine whether a wider number of companies should be able to access the scheme.

Intangibles reform

Legislation will be introduced to remove the pre-2002 exclusion from the intangible fixed assets regime to support UK investment in intellectual property and other intangible assets.

Tax relief for the cost of acquiring corporate intangible assets on or after 1 July 2020 will be provided under a single regime, subject to anti-avoidance restrictions.

This measure allows companies to claim corporation tax relief for pre-2002 intangible fixed assets acquired from related parties on or after 1 July 2020.

Corporate capital loss restriction

Companies making chargeable gains in accounting periods ending on or after 1 April 2020 will only be able to offset up to 50% of those gains using carried forward capital losses.

This measure includes an allowance that gives companies unrestricted use of up to £5 million capital or income losses each year, which means 99% of companies should be unaffected.

Transitional rules apply where an accounting period straddles the above date.