In a budget set to the backdrop of an evolving coronavirus pandemic the Chancellor delivered what he said was a “budget for security today and prosperity tomorrow”.
The budget measures were a split between short-term assistance to business and individuals to cover what he said would be the temporary disruption caused by the coronavirus and medium-term measures to take the economy forward.
These temporary measures included:-
- The announced drop in interest rates from the Bank of England
- Changes to statutory sick pay and the fact that the government would underwrite the cost of coronavirus sick pay (for up to two weeks) for businesses with less than 250 employees (as at 28 February 2020)
- Reduction in business rates for certain sectors including, retail, leisure and hospitality
- Access to business interruption loans of up to £1.2 million with 80% government security
- The recommencing of time to pay from HMRC.
- A £3,000 grant to businesses eligible for small business rates relief
The Chancellor announced that the cost of all these measures together with any additional support that the NHS would require would amount to some £30 billion
He then went on to outline his plans for the economy, post coronavirus, and this again involved a spending of an additional £30 billion per annum over the next five years. The vast majority of that funding was coming from borrowing and Brexit savings rather than additional taxation.
There were a few areas where the Chancellor announced taxation increases, one of which was in the election manifesto which had stated that corporation tax which was scheduled to go down to 17% would remain at 19%, and I suppose there is a feeling of you don’t miss what you’ve never had with that. The other main area of taxation which had been the source of much press speculation over recent months was entrepreneurs’ relief and the Chancellor announced that he was scaling back the lifetime allowance from £10 million back to £1 million with immediate effect. Whilst this measure will affect some of our most successful clients moving forward we are glad as a whole to see the retention of the entrepreneurs’ relief and the fact that the vast majority of our clients who do sell their businesses will still be eligible for the relief on their full sale proceeds.
The chancellor announced a number of tax saving measures that we expect to assist our clients, these included:-
- Increasing the point at which pension contributions taper starts
- Increasing National Insurance starting point to £9,500 (up from £8,632)
- Increasing the Structures and buildings allowance rate
- Increasing R & D Credit to 13% (up from 12%)
- Increasing Employment allowance to £4,000 (up from £3,000)
Many of our clients will have had discussions with us about the reduced benefit in kind rates for electric vehicles from 6 April 2020, Wilds took delivery of its first electric car on budget day, and the Chancellor announced funding for further superchargers to ensure that no matter where you are in the country you will never be more than 30 miles away from one.
As with all budgets there is a lot more reading to be done beyond that which the Chancellor announces in his stint at the box of Parliament. I am pleased to say that the vast majority of the additional stuff in the press releases is of a more technical nature rather than us discovering a whole load of important issues that the Chancellor “ forgot” to mention in his speech
The Chancellor used the prime minister’s mantra of “getting things done” on far too many occasions even for us accountants to tally up. Whether he achieves that is yet to be seen but what is certain is that this most definitely was a budget of “spend spend spend” although not quite enough for the leader of the opposition.
As advisors to small and medium sized businesses the measures in the budget were pleasing especially those relating to providing immediate assistance for businesses affected by the coronavirus and the long-term spending should positively affect most businesses by the increase of money within the economy, especially directed to the north of the country where many of clients do business.