The Budget 2020 will probably be one of the least reported except for the impact that Coronavirus has had.  The Chancellor started his speech with the steps that the government is introducing to assist businesses and individuals affected by it, described as the Budget of 3 Ts – Temporary, Timely and Targeted intervention.  In addition to the announcement from the Bank of England of a 0.5% drop in the base rate to 0.25%, a move designed to have “maximum impact,” the government announced a 3 point plan:

  1. Helping the NHS which appears to be an open cheque book to get through the coronavirus outbreak
  2. Statutory Sick Pay (SSP) will be available for all advised to self isolate – sick notes will be available via 111 and there will also be a reduced minimum floor for universal credit
  3. A £500m hardship fund for local authorities to help people in their areas

For businesses with fewer than 250 employees, SSP for upto 14 days will be refunded in full. A coronavirus loan scheme is also to be introduced for small businesses which will have “generous government guarantee” enabling banks to lend with confidence.

In addition with the reduced demand that is expected, there were 2 announcements on business rates, and promise of a review later in the year:

  1. Small business rates reduced to zero for retail, leisure and hospitality businesses
  2. A £3k cash grant to small businesses eligible for small business rate relief

Looking to the future, forecasts are based on the Office for Budgetary Responsibility (OBR), but these have become largely irrelevant due to coronavirus, however the government is sticking to the fiscal rules already set for this parliament.  The main announcements were as follows:

For individuals:

  1. By 2024, National Minimum Wage will reach 2/3 of median earnings
  2. Employees NI threshold will increase to £9500 from 2020/21, the employers NI threshold only increases a small amount to £8,788 pa – an individual directors pay will therefore be £732pm
  3. The tax threshold remains at £12,500 as for 2019/20
  4. The changes to the pension taper ensure that anyone earning £200,000 or less will not suffer a reduced annual allowance, and for high earners, the minimum level to which the annual allowance can taper down will reduce from £10,000 to £4,000 (for incomes over £300k) from April 2020
  5. Beer, wine and spirit duty are frozen to encourage pubs and distilleries, in addition there will be a business rate discount for pubs of £5k from next year
  6. Fuel duty frozen again, incentives to be made to encourage ownership of low emissions vehicles rather than increasing duties, a carrot and stick approach
  7. No VAT on women’s sanitary products from next year, reduced from the EU minimum of 5%

For businesses and business owners

  1. The expected removal of entrepreneurs relief did not happen, the Chancellor said we should not discourage entrepreneurs.  However the lifetime limit is reduced to £1m but 80% of SMEs should be unaffected.
  2. The Employment allowance is increased to £4k
  3. There was no mention of IR35, so the changes will take place from next tax year as announced
  4. Further investment into R&D, especially aimed at areas away from south east and London
  5. Corporation tax retained at 19% this year
  6. Tax relief for red diesel abolished for most sectors, but to exclude farming

Other announcements in Budget 2020

  1. £650m to help rough sleepers into accommodation funded by a 2% surcharge on stamp duty for non-UK residents
  2. From 1 December abolishing VAT on digital publications including books and magazines
  3. £500m to support rapid charging hubs for electric vehicles
  4. Investing £510m in the shared rural mobile phone network so that in the next five years 4G coverage will reach 95% of the country and £5bn to get gigabit-capable broadband into the hardest to reach places
  5. A new plastic tax aimed at encouraging recycling rather than producing more new plastic
  6. £120m immediate funding for repairs to damaged flood defences, and increased funding for flood prevention
  7. Big road investment (including A303 by Stonehenge) and a new pothole fund

Despite the Coronavirus taking much of the limelight, it does seem the period of austerity has ended and the next 12 months will be interesting with government trying to stimulate the economy with Brexit too.  As usual the Budget 2020 detail will be released over the next few weeks and you should seek professional advice before taking any steps based on these contents. If you would like advice in this or other areas feel free to call. Alastair Wood, AW Accounting, Gravesend, Kent – Accountants who “speak your language”