Budget gives support for the economic impact of Covid-19
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- Published: Wednesday, 11 March 2020 21:15
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The Chancellor of the Excequer, the Rt Hon Rishi Sunak, has presented his first budget to MPs, barely a month after being appointed. In the words of BBC’s Laura Kuenssberg, he opened a ‘very large cheque-book’ and signalled an end to austerity. Nick Ledingham, Chairman of NASDAL and Director at Specialist Dental Accountants, Morris and Co, tells GDPUK how this budget could affect dentists.
Nick Ledingham writes:
“In light of the problems caused by Coronavirus, Mr Sunak opted for a reflationary Budget to encourage spending and calm people’s fears about their income if they are ill or self-isolating. The Bank of England has already today announced a reduction in the Base Rate of 0.50% down to 0.25% to help boost the economy and the Chancellor also announced a series of short term measures to help both dental practices and employees.
“It is thought that Coronavirus could result in up to a fifth of the working population being off sick at any one time and the Chancellor announced the following measures specifically aimed at dealing with the Coronavirus fallout:
- Statutory Sick pay will be paid from day one rather than day four. This will mean that most dental practices will have all SSP refunded in full for up to 14 days of sickness.
- A Coronavirus loan scheme is to be introduced to cover the cost of salaries and bills which will offer loans of up to £1.2m to support dental practices. The government will offer a generous guarantee on those loans, covering up to 80% of losses, with no fees, so that banks can lend with confidence.
- A £5 billion emergency response fund will be set aside to support the NHS and other public services.
- HMRC will bring in a scheme to delay the payment of PAYE.
In other important measures for dentists the Chancellor announced:
“In order to support the delivery of services in the NHS, the two tapered pensions Annual Allowance thresholds will each be raised by £90,000. This means that from 2020-21 the “threshold income” will be £200,000, so dentists 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 dentists who also have an “adjusted income” above £240,000. For those on the highest incomes, 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 dentists with total income (including pension accrual) over £300,000. The move aims to reduce the likelihood of high income dentists being hit with large tax bills for saving into their pensions.
“Business Rates on dental practices - the dental sector is not retail, it is healthcare, and the business rates have not been reduced.
“An overhaul of Entrepreneurs’ Relief, but he stopped short of abolishing the tax break completely. As a result, the lifetime limit on claims from the relief will be reduced from £10m to £1m. This will mean that the majority of dentists selling their practices will still only pay Capital Gains Tax at 10% although dentists owning large practices may now have to pay more in Capital Gains Tax when they are sold.
“Other measures include:
- Corporation Tax will remain at 19%.
- The Structures and Buildings Allowance will increase from 2% to 3%.
- For those with little or no NHS income, Employment Allowance increases from £3,000 to £4,000.
- Fuel Tax has been frozen once again.
- 5% VAT on women’s sanitary products, known as the tampon tax, to be scrapped.
- Beer, wine and cider duties have been frozen so we are all able to drown our sorrows should we fall ill! If we are self-isolating, we will also benefit from the abolition of VAT on all digital publications.”
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