The new Chancellor of the Exchequer, Rishi Sunak, delivered his inaugural Budget to parliament on 11 March 2020, amid the backdrop of a growing threat to the economy from the global outbreak of coronavirus (COVID-19) – this Budget he announced aims to bring ‘stability and security’.
He warned of a temporary disruption to the economy from COVID-19. He said it will be ‘tough’ and ‘significant’, but things will return to normal. ‘What everyone needs to know is that we are doing everything we can to keep this country, and our people, healthy and financially secure.’
Alongside a £30 billion package of emergency measures to mitigate the short-term economic impact of COVID-19, the Government announced major investment plans as it formalised promises to ‘level up’ the country.
The Chancellor confirmed the rise in the threshold for employee National Insurance Contributions, and the widely anticipated abolition of Entrepreneurs’ Relief was watered down to a more limited reform, reducing the lifetime limit to £1 million from £10 million, which has come into immediate effect.
Reforms to pension relief, designed to specifically help with the National Health Service’s shortage of doctors and other clinical staff, will help all higher earners. Both thresholds for the tapering of annual allowances on pension contributions (currently £110,000 for ‘threshold income’ and £150,000 for ‘adjusted income’) has been raised by £90,000.
There was little change for employers and corporate tax. Corporation tax stays at 19%, and the R&D expenditure credit rate increases by 1%. IR35 and the Digital Services Tax were both confirmed as going ahead in April.
There are clearly uncertainties that remain about the full impact of COVID-19 and how this could affect longer-term tax and spending decisions. As we head towards the end of the Brexit transition period, there is also a requirement for businesses to plan for the issues required to trade with the EU on 1 January 2021.
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