New UK chancellor Rishi Sunak announced his first Budget in the House of Commons this week, outlining changes for workers and businesses, including measures to deal with the impact of coronavirus.
Sunak confirmed that the threshold for National Insurance contributions will increase to £9,500 annually, a move first announced in November 2019. This will take half-a-million employees out of the tax completely, whilst those earning more than £9,500 around £85-a-year better off.
The Chancellor also revealed that the so-called “tampon tax” – the 5% VAT on women’s sanitary products – will be scrapped, whilst promising that the tax on higher-earner pensions, including those belonging to NHS consultants, will be recalculated in a bid to deal with staffing issues.
In the lead up to the Budget announcement, there were fears that Entrepreneurs’ Relief (ER) would be scrapped. However, Mr Sunak instead revealed that the lifetime allowance for ER will be reduced to £1m from £10m. WTT Consulting’s Leila Ghazzali commented on the ER announcement, saying: “The PSCs I deal with usually come in between £100,000 and £500,000. In this sense, the chancellor’s been contractor-friendly.”
There was no announcement of a delay to IR35, with Rebecca Seeley Harris of IR35 advisory ReLegal Consulting commenting: “…my advice to contractors is to move on, accept it and work with those companies that are carrying out thorough assessments.”
Meanwhile, Mr Sunak offered some clarity for workers and businesses regarding measures to deal with the impact of coronavirus:
For workers, statutory sick pay (SSP) will be given to all those who have been advised to self-isolate, even if they are not displaying symptoms. Self-employed workers not eligible for SSP will be able to claim Employment Support Allowance, which will be available from day one rather than after a week.
For businesses, small companies will be able to access “business interruption” loans of as much as £1.2m, while English firms in the retail, leisure and hospitality sectors will have business rates abolished, providing they have a rateable value under £51,000.