UK Announces Budget
The new UK Chancellor, Rishi Sunak, revealed his maiden budget on March 11. In it, Sunak pledged to waive business rates on small retailers, to introduce a new tax on plastics, and to remove value-added tax on electronic publications.
The Chancellor announced that any eligible retail, leisure, or hospitality business with a rateable value below GBP51,000 (USD65,670) would, over the coming financial year, pay no business rates, the UK’s commercial property tax. Further, he revealed that the government will provide support for businesses struggling with paying their tax dues, by “scaling up” the Time to Pay service.
It also emerged in the budget that the UK Government had decided to reduce the lifetime limit for Entrepreneurs’ Relief to GBP1m (USD1.25m) from GBP10m, affecting qualifying disposals on or after March 11, 2020. Entrepreneurs’ Relief reduces the amount of capital gains tax paid on disposals of qualifying: businesses; shares in a personal company; or shares from an Enterprise Management Incentive (EMI). Under pre-Budget rules, capital gains tax is paid at 10 percent on claims up to a lifetime limit of GBP10m worth of qualifying gains.
In terms of other, more general, measures, the Budget further revealed that the Employment Allowance would be hiked by a third to GBP4,000, the structures and building allowance will be increased from two percent to three percent, and the research and development expenditure credit would be increased from 12 percent to 13 percent. Sunak confirmed that VAT would be removed on supplies of electronic publications, and on female sanitary products. The Budget additionally announced that funds for anti tax avoidance and evasion efforts would be increased, in a bid to secure extra revenue of GBP4.4bn to fund the National Health Service. Finally, the Budget included a number of environmental tax changes.
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