2020 is going to be a year of change: Brexit, a large conservative majority and plenty of proposed changes to financial laws. In today’s article, we’ll talk about how all this will affect your finances in 2020.
It’s important to be aware of how all the changes will affect your finances in 2020. Last week, we gave 5 things to keep an eye on. Today we’ll give 5 more things that might affect your finances.
1. Contractors and IR35
IR35 was introduced by the UK government in order to close a specific tax loophole.
Before IR35, workers could start their own companies, which would then receive the “pay” from the client. The “company profits” could then be distributed to the worker via a dividend. This would avoid certain tax liabilities like National Insurance.
IR35 makes this a lot harder, and introduces penalties for those workers trying to take advantage of the system.
It has some updates coming in 2020. There are certain exceptions for small businesses. And the responsibility for compliance has shifted slightly in some cases.
Make sure you check out the official documentation from HMRC to see if any of the changes apply to you.
2. Student Loan Repayments
A bit of good news for students and graduates! In April, the rules around repayment of student loans are changing slightly:
- Recent Graduates: the threshold for repayments rises from £25,725 to £26,575
- Graduates From 1998-2011: the threshold for repayments rises from £18,935 to £19,390
Earnings above the thresholds are assessed at the standard rate of 9%. The DfE also introduced a Postgraduate Loan (PGL) with a £21,000 threshold and 6% rate.
So now we have an 80 seat Conservative majority, we can stop talking about Brexit. Right?
Well we’re getting there. But as a business owner you need to stay on top of the changes that are coming.
The latest is that the government’s Brexit bill has passed. This means that the UK is due to leave on the 31st of January. The rest of the year will consist of a “transition period”, which will give the government time to thrash out a deal.
This is one area you will need to keep an eye on. Follow the news and bookmark this blog to get all the updates.
4. The Right to Broadband
Jeremy Corbyn did NOT become the Prime Minister last month. As such, the Labour pledge to give full-fibre broadband across 29m homes for free* is a non-starter.
However, there is something called the Universal Service Obligation which might affect your access to broadband in 2020. According to Ofcom, UK citizens have the “right to request a decent broadband service”.
There are a few caveats as to the cost and download speed, so make sure you check out the Ofcom documentation.
(* at a cost of £20b)
5. National Insurance Cuts
Boris Johnson promised to “put £500 in the pocket of everybody” via savings on their NI contributions.
The new NI rules won’t quite add up to £500. But he will be raising the exempt threshold from £8,632 to £9,500. Most people will save a bit less than £100 a year.
It’s important to keep up your NI payments if possible. Steven Cameron, pensions director at Aegon, says: “Under current rules, those not paying any NI lose out on credits towards their state pension”.
If you’d like to discuss any of these issues with us, please get in touch. We can arrange a free, no obligation meeting at your office.