Chancellor appears from the shadows to shed some new light on the economy
This Budget was always going to have the shadow of Brexit hanging over it; however, that appears a distant memory given the more pressing concerns surrounding coronavirus, writes Katie Varney – Corporate Tax Partner at Ensors Chartered Accountants.
With that being the backdrop to this Budget, you would also be forgiven for forgetting that Rishi Sunak has only been in the post for less than a month; a busy month it appears to have been.
Unsurprisingly, coronavirus took centre stage and a raft of measures aimed at reducing its economic impact were announced. As well as the commitment to give the NHS whatever it may need, extensive support for both individuals and businesses was introduced to include the following.
Extending the availability of Statutory Sick Pay (SSP); increasing the availability of benefits to those not entitled to SSP; and reimbursing some businesses who have paid coronavirus related SSP for staff.
Extension of the ‘time to pay’ regime for settling tax liabilities was announced and various working capital loan schemes have also been introduced to assist individuals and businesses.
The Budget announced significant capital expenditure on infrastructure projects including roadways, railways, broadband and the mobile network, but the recommendations of the IFS to increase taxes appear to have been largely ignored.
There were only three audible tax increases. The most wide-reaching is the reduction in the Entrepreneurs’ Relief lifetime allowance to £1m (from £10m) with immediate effect.
Another measure was a 2 per cent Stamp Duty Land Tax surcharge for non-residents purchasing UK property from 1 April 2021.
Thirdly, green taxes were announced from 2022, which include a plastic packaging tax, raising levies on gas, and the removal of relief on red diesel for some industries, notably excluding agriculture.
One notable absentee was the widely expected review of Inheritance Tax following reports from the Office of Tax Simplification and the All-Party Parliamentary Group in recent months.
The other tax headlines, many of which make good on election pledges, include:-
- Corporation Tax will remain at 19 per cent
- The level of Research & Development Expenditure Credit will increase to 13 per cent (from 12 per cent) from 1 April 2020
- The Structures & Buildings Allowance will increase from 2 per cent to 3 per cent
- The Employment Allowance for NICs is to increase by one third to £4,000
- Business Rates are to reduce with an increase in the level and scope of some available reliefs
- The NICs threshold is to increase from £8,632 to £9,500 for both employees and the self-employed
- The income level at which individual tax relief for pension contributions are restricted is to increase to £200,000, with a reduction in the minimum annual allowance from £10k to £4k
- Duties on spirits, beer, cider, wine and fuel are to be frozen at current rates.
The coronavirus crisis has clearly cast a long shadow over this Budget and the Chancellor has taken the view that a combination of fiscal stimulus and modest changes to the tax code is the best way to keep the country in good economic health.