Sajid’s Big Red Box - Tax changes to look out for in the Chancellor’s upcoming budget
21st Jan 2020
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Sajid Javid has been carrying around his mystery red box like he’s in a real-life episode of Deal Or No Deal (except it’s the economy at stake, not £250k). He recently announced that he will be unveiling his very first Budget on March 11th. He has pledged to use his first Budget to focus on the promises made during the election campaign which will unleash Britain’s economic potential and start a process of renewal for an economy that’s taken a lot of hits recently.
While a lot of the focus has been on the “tearing up” of the Treasury’s rules and what the Chancellor will do for us, one eagle-eyed accountant Paul Falvey, a tax partner at accounting firm BDO, has emphasized a few changes to taxes that you should watch out for once Sajid opens up his box.
IR35 - I have already spoken about this in a previous blog about what the Tory victory would mean for IR35 and off-payroll working rules. Basically, they need to scrap the existing “reforms” and give it another go as the current system is failing the people it’s supposed to protect and this was something that was promised during the campaign trail.
Property - There are significant changes planned to Capital Gains Tax which will mean that people who want to move house will either need to stay put in their current home until it’s sold or will have to make sure they sell up within 9 months of moving out to avoid a potential CGT charge.
National Insurance - Boris Johnson promised to cut taxes before the election and one of the ways he was going to do this was by raising the threshold for National Insurance contributions to £9,500 per year in 2020 along with reducing business rates. Poor Sajid now has to back this up which will prove quite difficult as the Treasury is still massively in deficit.
Inheritance Tax - This bit is quite complicated and best described by Mr Falvey himself here but basically a change to inheritance tax has been coming for a long time, which is seen by many as outdated and unfair. There is talk of “simplifying” the system (good luck!) by reforming Business Property Relief which can give 100% IHT relief for trading assets. It may also be possible to redefine what a “trading company” is, which would benefit companies who may qualify for BPR as a result.
So there you have it! Who knows what will happen. The only thing that would surprise me nowadays would be if Benjamin Rees-Mogg offered to pay off the national deficit using his Trust Fund. Anyway, you buy the popcorn, I’ll grab the Maltesers and I’ll meet you on March 11th to watch it all unfold.