On 11 March 2020, the new Chancellor, Rishi Sunak, presented his first budget in the face of the UK leaving the European Union and the global outbreak of the coronavirus. Here’s a rundown of what was covered in the speech.
The morning started with the Bank of England cutting its main interest rate from 0.75% to 0.25% in an effort to curb the effects of the coronavirus on the UK economy.
The economy and fiscal forecasts
- The UK economy is robust and public finances are sound but there is likely to be temporary disruption and significant impact due to the coronavirus. The strategy to deal with this is to provide immediate support for those who get sick by funding public services and provide a bridge for businesses.
- The NHS will get whatever it needs to deal with the coronavirus.
- OBR – growth forecast: 1.1% 2020, 1.8% 2021, 1.5% 2022, 1.3% 2023, 1.4% 2024.
- Inflation forecast 1.4% this year and 1.8% for next year.
- Borrowing forecast to increase slightly to 2.4% in 2021, 2.8% in 2022, then fall to 2.5% and then 2.2% in later years. These figures don't appear to have taken the coronavirus into account.
Support for the coronavirus outbreak
- During the immediate crisis there will be financial support for people who can't work.
- Statutory Sick Pay (SSP) for all those advised to self-isolate will be payable from day one instead of day four.
- Soon, people will be able to get sick notes by calling 111.
- It will be quicker and easier to access benefits for those who don't get sick pay (for example self-employed) with claims payable from day one and not day eight.
- The minimum income limit for universal credit is to be removed.
- For businesses with less than 250 employees, the cost of Statutory Sick Pay for up to 14 days will be refunded by government in full.
- Dedicated HMRC helpline to help with time to pay.
- Implementation of coronavirus business interruption loan scheme of up to £2 million per loan.
- To support small businesses affected by the coronavirus, the government will abolish business rates for 2020-21. The relief will also be expanded to the leisure and hospitality sectors.
Taxes and duties
- Corporation Tax to remain at 19%.
- Increase in employee NIC threshold to £9,500 from £8,632.
- Entrepreneurs relief will have the lifetime allowance reduced from £10 million to £1 million. This will apply to qualifying disposals made on or after 11 March 2020 and to certain disposals made before 11 March 2020.
- VAT to be abolished on digital publications.
- Stamp Duty Land Tax (SDLT) surcharge of 2% on non-UK residents purchasing residential property from 01-April 2021.
- Review of changes to the off-payroll working rules (commonly known as IR35) has happened and the reform will be legislated in Finance Bill 2020 and implemented on 6 April 2020 including the loan charge review.
- Planned increase in spirits, beer, wine and cider duty cancelled. No mention of duty on tobacco.
- Pubs – for this year only, business rate discount increased from £1,000 to £5,000.
- Fuel duty to be frozen for another year.
- The annual subscription limit for Junior ISAs and Child Trust Funds will be increased from £4,368 to £9,000.
- £6 billion projected savings going back to business including:
- R&D tax credit increased from 12% to 13%.
- Structures and Buildings Allowance increased from 2% to 3%.
- Increased employment allowance to £4,000.
Investment and environment
- Increase taxes on pollution. From April 2022, the climate change levy will be frozen on electricity and raised on gas.
- Reforms to make it cheaper to buy zero emission cars, vans and bikes.
- £500 million to support rapid charging hubs every 30 miles.
- £5 billion for gigabyte broadband into hardest to reach places.
- 4G coverage for 95% of the country.
- Biggest investment into roads. £2.5 billion pothole fund, which would allow 50 million potholes to be filled.
If you’d like further details you can visit the Budget 2020 page of GOV.UK. If you have any questions about any of the topics in this summary do not hesitate to email firstname.lastname@example.org or call +27 (0) 20 7759 7514.
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