2020 Budget Announcements

National Insurance Contribution Rates

Increasing the National Insurance Contribution thresholds from £8,632 to £9,500, saving a typical employee around £104 a year from April.

IR35 rules

Review of changes to the off-payroll working rules (commonly known as IR35) – At Budget 2018 the government announced that it would reform the off-payroll working rules in the private and third sectors from April 2020. The government has recently concluded a review of the reform, and is making a number of changes to support its smooth and successful implementation.

Top Slicing Relief (TSR) On Life Insurance Policy Gains

Following a recent First-Tier Tribunal case, the government will legislate in Finance Bill 2020 to put beyond doubt the calculation of TSR by specifying how allowances and reliefs can be set against life insurance policy gains. This measure will apply to all relevant gains occurring on or after 11 March 2020.

Low Earners Pension Contributions

Those earning around or below the level of the personal allowance and saving into a pension may benefit from a top-up on their pension savings equivalent to the basic rate of tax, even if they pay no tax. Whether they receive this top-up depends on how their pension scheme administers tax relief.

Tapered Annual Allowance For Pensions

The pensions annual allowance is the maximum amount of tax-relieved pension savings that can be accrued in a year. For those on the highest incomes, the annual allowance tapers down from £40,000. HM Treasury has reviewed the tapered annual allowance and its impact on the NHS, as well as on public service delivery more widely.

Tapered Annual Allowance

The two tapered annual allowance thresholds will each be raised by £90,000. This means that from 2020-21 the “threshold income” will be £200,000, so individuals with income below this level will not be affected by the tapered annual allowance, and the annual allowance will only begin to taper down for individuals who also have an “adjusted income” above £240,000.

Minimum Tapered Annual Allowance

The minimum level to which the annual allowance can taper down will reduce from £10,000 to £4,000 from April 2020. This reduction will only affect individuals with total income (including pension accrual) over £300,000.

Lifetime Allowance For Pensions

The lifetime allowance, the maximum amount someone can accrue in a registered pension scheme in a tax-efficient manner over their lifetime, will increase in line with CPI for 2020-21, rising to £1,073,100.

Individual Savings Account (ISA) Annual Subscription limit

The adult ISA annual subscription limit for 2020-21 will remain unchanged at £20,000. (55)

Junior ISA And Child Trust Fund Annual Subscription Limit

The annual subscription limit for Junior ISAs and Child Trust Funds will be increased from £4,368 to £9,000.

Non-UK Resident Stamp Duty Land Tax (SDLT) Surcharge

The government will introduce a 2% SDLT surcharge on non-UK residents purchasing residential property in England and Northern Ireland from 1 April 2021.

Additional Compliance Resources for HMRC

The government is investing in additional compliance officers and new technology for HMRC. This investment is forecast to bring in £4.4 billion of additional tax revenue up to 2024-25 by enabling HMRC to further reduce the tax gap through additional compliance activity and expanding debt collection capabilities.