Our finances, as a nation, as individuals, employers and employees, are affected by what is said in Parliament and published as part of the Spring Budget 2020.
The Budget updates us on the financial state of the nation and outlines the government’s plans for tax and spending for the financial year ahead.
The new Chancellor of the Exchequer, Rishi Sunak, delivered his first Budget to Parliament on 11 March 2020 – just four weeks after taking on the role. This followed the UK’s departure from the European Union and took place against the backdrop of the Coronavirus pandemic.
You can explore the Budget in full for yourself on gov.uk but here’s a quick overview of some key highlights.
Covid-19 (Coronavirus) response
£12 billion was announced for temporary and targeted measures for people and businesses in response to the Covid-19 pandemic. Further measures have since been announced to help businesses and the self-employed – you can find more details of that in our Covid-19 factsheet.
This £12 billion figure includes a £5 billion response fund to ensure the NHS and other public services receive the funding they need to respond to and recover from the outbreak.
For individuals, it includes extending Statutory Sick Pay (SSP) for those advised to self-isolate, those caring for others who self-isolate, and support through the welfare system for those who cannot claim SSP, as well as a hardship fund.
Business rates
Business rates for shops, cinemas, restaurants, and music venues in England with a rateable value below £51,000 have been suspended for a year. This tax holiday will be worth up to £25,000 to thousands of businesses across the retail, leisure and hospitality sectors.
The government is launching a fundamental review of business rates and will include those in their autumn report later in the year so look out for that.
Corporation tax
Corporation Tax is remaining the same at 19%. This figure means that the UK’s Corporation Tax rate remains the lowest in the G7 and G20.
Employment costs
To cut the cost of taking on staff the government is increasing the National Insurance Contributions (NICs) Employment Allowance from £3,000 to £4,000. Over half a million businesses will benefit from this reduction to their costs of employment, with an average gain of £850 per year.
Employee measures
Taking action to help with the cost of living for everyone across the UK, the government announced an increase in the National Living Wage from £8.21 to £8.72 to take effect from April.
The Budget also outlined a tax cut for 31 million working people with the increase in the National Insurance contributions (NICs) thresholds for employees and the self-employed from £8,632 to £9,500.
These measures will save the typical employee around £104 and a typical self-employed person around £78 a year from April.
Duties
Good news as fuel duty will be frozen for the tenth consecutive year.
There’ll also be a freeze in duty rates for beer, wine, cider, and spirits while the duty rate on all tobacco products will continue to increase by 2% above RPI inflation.
The first of two Budgets this year
The March Budget was the one delayed from last year and then there will be one in the autumn as normal. By that time the impact of Coronavirus on our economy will be much clearer so it’ll definitely be worth paying close attention to the next Budget too.
If you would like more detailed, one-to-one advice on any of the issues raised in the Chancellor’s Spring Budget, please do get in touch with us by emailing kathryn@halfpennyaccountancy.co.uk