Tax changes for 2020

Tax changes for 2020

As 2019 draws to a close and a new year and new decade awaits us, a number of changes to taxation legislation are due to be implemented in 2020. These taxation changes are due to affect those with rental property or second homes as well as impacting estates liable for inheritance tax. David Redfern, tax preparation specialist and Managing Director of DSR Tax Claims Ltd looks ahead to the new year’s changes and determines whether these changes are likely to affect you.

 

Inheritance Tax (IHT) has long been a hot topic and is considered to be one of the UK’s most unpopular taxes, with over half of taxpayers considering it to be an unfair example of double taxation as well as noting that the tax breaks are not available to all taxpayers, such as those who are cohabiting rather than married or in a civil partnership. Changes to IHT thresholds are due to come into force from 6th April 2020. Redfern explains “Inheritance Tax remains an unpopular tax in the minds of the UK public with many considering it to be an unfair tax, as taxpayers have already paid tax on the original earnings and income and are then taxed a second time upon death. With these criticisms in mind, the Residence Nil Rate Band will be increased to £175,000 which means that along with the existing IHT Nil Rate Band, taxpayers will be able to leave estates of up to £500,000 without being liable for inheritance taxes. For estates over £2 million, this band is tapered at £1 for each £2 over the threshold so that the Residence Nil Rate Band won’t be available for estates over £2.35 million”. These changes come into force in the 2020/21 tax year beginning on 6th April 2020.

 

Landlords and those with second properties will be hit by a number of changes. Landlords will face the end of tax breaks on mortgage interest expenses, which have been gradually phased out since April 2017 and will come to an end in April 2020. Meanwhile changes to lettings relief will impact on taxpayers who let out second homes. Redfern states “The phasing out of tax relief on mortgage interest payments will hit higher rate taxpayers. As it has been replaced by a 20% tax credit, basic rate taxpayers are likely to be unaffected although changes to how mortgage income is reported through Self Assessment may push more taxpayers into a higher tax rate band. Changes to lettings relief will mean that now only those who let rooms in their own homes will be eligible to this tax relief on Capital Gains Tax, worth up to a potential £40,000, so those taxpayers who own a second property which they let will lose this form of tax relief”. Other changes to Capital Gains Tax (CGT) relating to property mean that from 6th April 2020, any CGT payable on property sales must be reported to HMRC within 30 days of the sale with an advance payment on the tax due at the same time. Previously, CGT would not be reportable or payable until the individual was required to file their Self Assessment tax return.

 

Redfern also highlighted proposed changes to the National Insurance threshold, due to rise to £9,500 in April 2020, stating “The new government has publicly committed to improving the lot of lower paid workers so intend to raise the threshold for National Insurance to £9,500 with a longer term intention to raise it to sit in line with the Income Tax threshold, currently set at £12,500. They are also proposing to change Employment Allowance rules so that this tax break for employers would be targeted at small and medium businesses with a NIC liability of less than £100,000. Along with today’s announcement of an intention to increase the National Minimum Wage above inflation, these should be seen as welcome changes for those on lower incomes”.

 

The 2020/21 tax year begins on 6th April 2020, which is when changes to Inheritance Tax, Capital Gains Tax and Mortgage Interest Relief will come into force.

 

 

For high resolution images or further information, click here

 

For more information on claiming allowable expenses and how DSR Tax Claims can help you claim, please click here

 

About DSR Tax Claims Ltd

DSR Tax Claims Ltd (company registration 11459292) are a firm of tax rebate specialists serving clients nationwide. DSR Tax Claims are tax preparation experts who specialise in identifying potential allowable expenses for tax rebates for clients. Their specialist team can help employed and self-employed subcontractors with all relevant paperwork to ensure their claim is handled in an accurate and efficient manner.

 

For more about DSR Tax Claims, visit https://dsrtaxclaims.co.uk/

 

For media enquiries, please email pressoffice@dsrtaxclaims.co.uk or call 0115 795 0232

 

DSR Tax Claims Ltd

Company Registration: 11459292

Registered Office: Ground Floor, Seven Mile House, 1 Mansfield Road, Papplewick, Nottingham, NG15 8FJ