Rishi Sunak, the Chancellor of the Exchequer, yesterday delivered his budget which covered a number of different topics. There were two particular points that we felt should be highlighted to our clients.
National Insurance Contributions and the National Living Wage
Firstly, changes were announced to National Insurance Contributions and the National Living Wage. Currently, employees pay National Insurance on any earnings over £166.00 per week. From April 2020, employees will start paying National Insurance when they earn £9,500.00 per annum (approximately £182.60 per week). By 2024, it was also announced that the National Living Wage will reach two thirds of median earnings, increasing to £10.50 per hour. The Chancellor also announced plans to change the age threshold from 25 to 21, meaning you could benefit from this increased rate from aged 21, if you are 21 or older in 2024.
Secondly, the rules regarding Entrepreneurs’ Relief have been amended. Entrepreneurs’ Relief reduces the amount of Capital Gains Tax paid in respect of qualifying transactions. There is no limit to the number of times you can claim Entrepreneurs’ Relief but the previous overall limit of relief (which meant you could only claim relief of up to £10million during your lifetime) has now been reduced from £10million to £1million per individual. From pre Budget Speculation it was feared that Entrepreneurs’ Relief may have been abolished entirely, and so the limited change is better news for business owners and it is expected that up to 80% of small businesses will not be affected by this change.
If you have any queries on matters raised in the Budget please do not hesitate to contact our Commercial Team who will endeavour to assist.