Budget Report 2020

page 1 BUDGET 11 MARCH 2020 @ Copyright 11 March 2020. All rights reserved. This summary has been prepared very rapidly and is for general information only. The proposals are in any event subject to amendment before the Finance Act. You are recommended to seek competent professional advice before taking any action on the basis of the contents of this publication. CONTENTS Introduction 1 Personal taxation 2 Pensions, savings and investments 4 Capital taxes 6 Business taxes 7 Value added tax 9 Tax avoidance and evasion 10 National insurance contributions 11 Financial calendar 12 Introduction “….get it done” was a recurrent phrase in the Budget speech of the new Chancellor, Rishi Sunak. It could equally have been “get it spent” or “get it borrowed” as Mr Sunak announced a raft of spending initiatives with few supporting tax increases. His performance did not follow the standard playbook for the first Budget after a general election. Such set pieces have generally been when a Chancellor takes advantage of his distance from the next visit to the polls to deliver the bitter medicine of tax rises. However, with the threat to the global economy caused by the coronavirus pandemic these were not normal times. The Office for Budget Responsibility (OBR) was expected to cut projected UK economic growth even before the virus emerged. Its pre-measures forecasts were all closed by 25 February, meaning that the coronavirus effect was “largely confined to a modestly weaker outlook for growth in world trade and the UK’s export markets”. Mr Sunak had the benefit of seeing what happened since that date and clearly decided that the medicine required was a large dose of tonic, rather than tax. He announced a total package of fresh spending for 2020/21 of £30 billion, of which £12 billion was directly attributed to countering the impact of coronavirus on the UK economy and NHS. Total government borrowing was increased for the next five years by over £110 billion as a result of decisions taken in this Budget. But this is not the end of the story, as another Budget is due in the autumn. By then the consequences of coronavirus should be clearer and we may see other topics addressed, such as inheritance tax reform, which were understandably put on hold this time around. The Chancellor announced a £12 billion “temporary, timely and targeted” coronavirus stimulus on top of an £18 billion increase in general public spending, but tax measures were relatively few. Significant announcements included the following: l The pension annual allowance thresholds will each be increased by £90,000 from 2020/21, removing taper as an issue for most people with incomes under £200,000. l The lifetime limit on capital gains eligible for entrepreneurs’ relief has been cut from £10 million to £1 million with immediate effect. l The annual investment limit for junior ISAs and child trust funds will be increased to £9,000 from 2020/21. l The national insurance contributions employment allowance will increase from £3,000 to £4,000 from April 2020. l There will be a review of the taxation of funds to make the UK more attractive for fund management. It will also consider the VAT treatment of management fees. l From April 2021, only zero emission vehicles will get 100% first year allowances. Cars with emissions up to 50g/km will have an 18% a year writing down allowance; for higher emitters the allowance will be 6% a year. l From April 2022, red diesel (and rebated biofuels) will only be available to users for agriculture, rail and non-commercial heating. l E-publications (e-books, e-newspapers, e-magazines and academic e-journals) will be VAT zero-rated from 1 December 2020.