In the first Budget of the decade and the first one in over 50 years outside of the EU, the new Chancellor, Rishi Sunak, appeared to unveil a series of giveaways. The Budget 2020 was unveiled against the backdrop of the ever-growing Coronavirus outbreak, The news was headed by a £30 million investment to mitigate the impact of the virus.
Small business and climate change boost
In a further apparent loosening of the purse strings, initiatives were announced to boost small businesses and tackle climate change. These changes will be partly funded by a reduction in Entrepreneurs’ Relief lifetime limit from £10million to £1million and from the abandonment of the reduction of corporation tax rate from 19% to 17%.
The other main changes included:
- for this year, business rates in England will be abolished for eligible businesses in the retail, leisure and hospitality sectors with a rateable value below £51,000
- also for this year, a £3,000 cash grant per business that is currently eligible for the small business rates relief, as well as an increase in the business rate discount for pubs from £1,000 to £5,000
- increasing public investment in R&D to a record £22billion a year
- increasing the rate of Research & Development Expenditure Credit from 12% to 13%.
- an increase in the NIC Employment Allowance, from £3,000 to £4,000 – effective from April 2020 – plus an increase in the NIC threshold to £9,500 for employees
- small firms will be able to access ‘business interruption’ loans, up to £1.2million
- increase in capital allowances – structures and buildings allowance – from 2% to 3% per annum
- VAT on digital publications being abolished from 1 December 2020
- continued focus on aggressive tax avoidance
- Off-payroll working rules extended to private sector employers as previously announced
- 30-day deadline for reporting and paying CGT on residential property applies from 6 April
- improved ‘Time to Pay’ arrangements to help taxpayers affected by COVID-19
Feeling of security today
The Chancellor said that he intended this Budget to promote a feeling of ‘security today’ and ‘prosperity tomorrow’ – our initial reaction is that he appeared to do a good job on that. However, as always, it takes some time to read through the political spin and understand more about what really changed (and when it will take effect).
We will continue to look through the finer points from today’s announcements and provide a more detailed analysis of the key changes in due course.
Meanwhile, here is our Budget 2020 Summary Booklet for you to download and read.
If you need help interpreting these changes and what they mean for you, call us today on 01785 243276.