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Budget 2020: People and Organisation issues

The recently appointed Chancellor, Rishi Sunak, delivered his first Budget on behalf of the Government on 11 March 2020. The Budget announcements reflect a number of the pledges made in the Conservative Party’s 2019 Election Manifesto (Manifesto), but has also clearly been shaped by concerns regarding, and against the backdrop of, the COVID-19 Coronavirus (COVID-19) outbreak. A summary of the key Budget announcements for employers and employees is set out below.

Budget 2020: Entrepreneurs' relief

As widely predicted, the Chancellor in today's Budget made changes to Entrepreneurs' Relief (ER). The changes introduced reduce the ER lifetime limit from £10 million of qualifying gains to £1 million. The new £1 million limit will apply in respect of disposals that take place from today (11 March 2020) and will take into account any earlier disposals which qualified for ER. The first £1 million of qualifying gains will be taxed at 10% with any remaining gains taxed at 20%.

Budget 2020 - Real Estate Tax

It has been confirmed in Budget 2020 that the Corporation Tax main rate for the financial year beginning 1 April 2020 will remain at 19%. This is significant for non-resident corporate landlords who, following the changes introduced in Finance Act 2019, will be brought within the scope of corporation tax in respect of the profits of their UK property business from 6 April 2020 (rather than being subject to income tax, which applies for periods prior to 6 April 2020).

Budget 2020 - Stamp duty on unlisted shares and demergers

The 2020 Budget has reconfirmed that the legislation introducing the following for stamp duty provisions will be in the Finance Bill 2020: a minimum deemed market value consideration rule for transfers of unlisted shares of a UK incorporated entity to a “connected” company where some or all of the consideration consists of the issue of shares, and a relief for certain qualifying partition demergers, to stop a potential double charge.

Budget 2020 - Stamp Duty Land Tax - 2% non-UK resident surcharge

The government has confirmed in today’s Budget that it will introduce a 2% SDLT surcharge on non-UK residents purchasing residential property in England and Northern Ireland from 1 April 2021. In effect, foreign buyers have 13 months to buy residential land if they do not want to pay the additional 2% surcharge (taking the top SDLT rate to 17%).