Budget 2020

Whilst last week’s Budget seems a distant memory now, it is important to remember that life will return to normal at some point and so it’s important to continue to plan for your future as before.  Below we cover some of the main points that came out of the Budget:

Pension changes

For those earning in excess of £110,000 known as “threshold income”, the tapered Annual Allowance has had a large impact on their ability to fund their retirement. From 6/4/2020, the “threshold income” will increase to £200,000 and the point at which the annual allowance is tapered increase to £240,000.  This will have the effect of allowing a significant amount of people to increase the amounts they can contribute towards retirement.

Junior ISA

The annual subscription limit for Junior ISAs has increased from the current limit of £4,368 to £9,000.  This continues to provide an excellent opportunity to save for future generations.  However, please remember that the funds can be withdrawn by the child at age 18 so consideration of this fact is important.

Entrepreneurs’ Relief (ER)

For any disposal of businesses made after 11th March 2020, the lifetime limit was reduced to £1 million from the previous level of £10 million.  This could have a significant impact on those looking to fund retirement from the sale of their businesses.  Any disposals already started before 11th March but not yet completed will benefit from special provisions.

Capital Gains Tax on residential property

For disposals of residential property on or after 6th April 2020, there is a requirement to report any gain and make a payment on account for associated tax within 30 days of the property disposal.

Inheritance Residence Nil Rate Band (RNRB)

For deaths occurring in the tax year 20/21, the RNRB increases to £175,000.  After 6th April 2021, this will be increased in line with CPI.  Remember that not everyone benefits from the RNRB and that there are effective planning strategies that can be applied to ensure this can be maximised, where possible.

If you have any queries regarding the above information, please do not hesitate to contact us.