A long time in politics
On 12 December 2019, the most important issue in the General Election appeared to be Brexit. On New Year’s Eve, Rishi Sunak was Chief Secretary to the Treasurer – Chancellor Sajid Javid’s second-in-command – and no one had heard of Coronavirus. When Mr Sunak took over as Chancellor on 13 February, with four weeks to prepare a Budget speech, there were only a handful of cases of the illness in the UK. In that short time, Covid-19 has become the starting point of a series of measures that the Office for Budget Responsibility described as the biggest fiscal stimulus
since 1992. There seemed to be no end to the giveaways – £30 billion in all – and very little tax raising (even a freeze on alcohol and fuel duties). It seemed very different from the austerity of most of Philip Hammond’s Budgets.
What the Chancellor says in the House is only part of the story. When he sits down, the Government publishes everything on the internet – measures he hasn’t mentioned; the devilish detail of things he only touched on; and the tables of financial estimates that show what makes a big difference to the public finances and what is marginal. This booklet summarises the most important points and explains how they affect businesses and individuals. We have included some of the changes that were announced in previous years and are about to come into effect – and some that we can look forward to in the future.
The Coronavirus outbreak has created unprecedented uncertainty, and it is impossible to know whether the proposed measures will be enough. The Chancellor mentioned another Budget coming in the Autumn – presumably we will have a better idea then of how we and the rest of the world have coped, as well as being clearer on the outcome of the Brexit negotiations with the EU. In the meantime, we will be happy to discuss the present proposals with you and help you understand the implications for your finances.
- £12 billion package of measures to help individuals and businesses cope with Covid-19
- Increase in employee and self-employed NI contribution threshold to £9,500 for 2020/21
- Immediate cut in lifetime gains eligible for Entrepreneurs’ Relief from £10m to £1m
- Increase in thresholds for pension relief Annual Allowance tapering to £200,000/£240,000
- Off-payroll working rules extended to private sector employers as previously announced
- Employment Allowance increased for 2020/21 to £4,000 of employer’s Class 1 NIC
- 30-day deadline for reporting and paying CGT on residential property applies from 6 April
Measures to mitigate the impact of Coronavirus
The Chancellor began his speech by addressing the economic impact of the Coronavirus outbreak. As well as promising ‘whatever the NHS needs’ to deal with it, he announced a range of measures, estimated to cost in total £12 billion, to help individuals and businesses to cope with the financial consequences. These include the following:
• Statutory Sick Pay (SSP) to be paid from the first day of absence, not the fourth, where people have the virus or have to self-isolate, or care for such people.
• Support through Universal Credit and Employment and Support Allowance for self-employed people and others not entitled to SSP.
• Full funding of the cost of two weeks’ SSP for small and medium-sized employers whose workers have claimed SSP as a result of Covid-19.
• Extension of business rates reliefs: retail, leisure and hospitality businesses with rateable values up to £51,000 will be eligible for 100% relief in 2020/21, and a £5,000 discount (up from £1,000) for pubs with a rateable value below £100,000.
• Small businesses already eligible for 100% business rates relief will receive a grant of £3,000 to help with business costs.
• Businesses and self-employed individuals in financial distress will be able to negotiate ‘time to pay’ arrangements with HMRC without incurring late payment penalties.