Summary of Budget 2020

Chancellor Rishi Sunak delivering his first budget yesterday, changes announced include measures put in place to support the economy in the face of the coronavirus such as additional support for the NHS and public services and loans available for small businesses to support ‘business interruptions’. Furthermore minor Stamp Duty changes have been introduced in respect of non-UK residents. Business rates for small businesses have been scrapped.

Below is a summary of the main points:

Coronavirus and public services

  • £5bn emergency response fund to support the NHS and other public services in England
  • All those advised to self-isolate will be entitled to statutory sick pay, even if they have not presented with symptoms
  • Self-employed workers who are not eligible will be able to claim contributory Employment Support Allowance
  • The ESA benefit will be available from day one, not after a week as now
  • £500m hardship fund for councils in England to help the most vulnerable in their areas
  • Firms with fewer than 250 staff will be refunded for sick pay payments for two weeks
  • Small firms will be able to access “business interruption” loans of up to £1.2m
  • Business rates in England will be abolished for firms in the retail, leisure and hospitality sectors with a rateable value below £51,000
  • £6bn in extra NHS funding over five years to pay for staff recruitment and start of hospital upgrades

Personal taxation, wages and pensions

  • The tax threshold for National Insurance Contributions will rise from £8,632 to £9,500
  • The move will take 500,000 employees out of the tax altogether
  • Those earning more than £9,500 will be, on average, £85 a year better off
  • 5% VAT on women’s sanitary products, known as the tampon tax, to be scrapped
  • No other new announcements on income tax, national insurance or VAT
  • Tax paid on the pensions of high earnersto be recalculated to address staffing issues

Business, digital and science

  • System of High Street business rates to be reviewed later this year
  • Firms eligible for small business rates relief will get £3,000 cash grant
  • Entrepreneurs’ Relief will be retained, but lifetime allowance will be reduced from £10m to £1m
  • £5bn to be spent on getting gigabit-capable broadband into the hardest-to-reach places
  • Science Institute in Weybridge, Surrey to get a £1.4bn funding boost
  • An extra £900m for research into nuclear fusion, space and electric vehicles
  • VAT on digital publications, including newspapers, e-books and academic journals to be scrapped from December

The state of the economy and public finances

  • Economy predicted to grow by 1.1% this year, revised down from 1.4% a year ago
  • The figure, which does not take into account the impact of coronavirus, would be the slowest growth since 2009
  • Growth predicted to rebound to 1.8% in 2021-22, 1.5% in 2022-23 and 1.3% in 2023-24
  • Inflation forecast of 1.4% this year, increasing to 1.8% in 2021-2022
  • Government to borrow £14.6bn more this year than previously forecast, equivalent to 2.1% of GDP
  • Total additional borrowing of £96.6bn forecast by 2023-2024 to pay for spending commitments
  • Debt as a percentage of GDP forecast to be lower at end of current Parliament than now

If you would like any more information in relation to this article then please feel free to contact me via email: gunduz.misiri@bowlinglaw.co.uk or visit my profile.

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