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Budget Snapshot 2020

The Budget Statement was delivered today at 12.30pm by the new Chancellor of the Exchequer, Rishi Sunak.

The last Budget was in November 2018. Records suggest the last calendar year before 2019 without a UK Budget was 1768, the year James Cook set sail on his first voyage to the Pacific.

 

About the Budget

 

The Budget is a report presented each year by the Chancellor to Parliament and the nation. The primary role of the Budget is to control public finances by setting out how much tax the Government will collect, how much the Government will borrow and how much the Government will spend. This snapshot is not an in-depth analysis but aims to give you a quick summary of the key points announced by the Chancellor from the dispatch box.

 

Main Headlines from the Speech

Introduction

 

The Chancellor describes this Budget as delivering on the change promised in the General Election.

 

Coronavirus

 

  • £5 billion emergency response fund to support the NHS and other public services.
  • Statutory sick pay will be payable from day 1 to all those who choose to self-isolate even if they don’t have symptoms. Sick notes will be available from NHS 111.
  • Contributory employment and support allowance claimants will be able to claim sick pay on day one not after a week.
  • £500 million fund for councils to help vulnerable people.
  • SMEs with fewer than 250 staff will be refunded for sick pay payments for two weeks.
  • SMEs will be able to access business interruption loans of up to £1.2 million guaranteed up to 80% by the Government.
  • Business rates will be abolished for firms in retail, leisure and hospitality sectors with a rateable value below £51,000.
  • There will be a statement by the Health Secretary, Matt Hancock, in the Commons tonight at 7.00.pm

 

Economic forecasts

 

The forecasts do not take into account the effect coronavirus may have on the economy.

Growth

2020: 1.1%

2021: 1.8%

2022: 1.5%

2023: 1.3%

2024: 1.4%

Inflation

2020: 1.4%

2021: 1.8%

2022: 2.0%

2023: 2.0%

2024: 2.0%

Borrowing forecast (not expressed in cash terms)

2.1% of GDP in 2019/2020

2.4% in 2020/2021

2.8% in 2021/2022

2.5% in 2022/2023

2.4% in 2023/2024

2.2% in 2024/2025

Debt forecast to go down from 79.5% of GDP this year to 75.2% in 2024/2025.

Review of fiscal framework by autumn in view of the global low interest rate environment.

 

Taxation and pensions

 

  • No change to income tax thresholds in 2020/2021.
  • NI threshold increases to £9500 from April 2020.
  • NI holiday for employers of veterans in first year of civilian employment.
  • Off payroll working rules (IR35) to be implemented as planned from April 2020.
  • Tapered annual allowance: income thresholds to be increased by £90,000 and minimum tapered annual allowance to be reduced to £4000 from April 2020.
  • Lifetime allowance to increase to £1,073,100 in 2020/2021.
  • Annual subscription limit for Junior ISAs and Child Trust Funds to increase from £4368 to £9000. ISA limit remains unchanged at £20,000.
  • Legislation to put beyond doubt the calculation of top-slicing relief by specifying how allowances and reliefs can be set against life insurance policy gains and will apply to all relevant gains occurring on or after 11 March 2020.
  • VAT to be abolished on women’s sanitary products.
  • Entrepreneur’s relief: lifetime limit reduced to £1 million
  • Stamp duty surcharge of 2% on non-UK residents purchasing residential property from April 2021 to fund rough sleepers fund.
  • Independent Low Pay Commission to have new remit of targeting a National Living Wage of two thirds of median earnings by 2024 which is estimated to be £10.50 an hour.

 

Excise duties

 

  • No increase to beer, cider, wine and spirits duties.
  • No increase to fuel duty.
  • Tobacco duty to increase by RPI + 2% (RPI + 6% for hand-rolling tobacco) until the end of this Parliament. These changes will take effect from 6.00pm this evening.

 

Environment

 

  • Abolition of tax relief for red diesel in 2022 for most sectors except agriculture, rail, fishing and domestic heating.
  • Plastic packaging tax: from April 2022, charge of £200 a tonne on packaging with less than 30% recycled content.
  • 30,000 hectares of trees to be planted and 35,000 hectares of peatland restored.
  • Investment in flood defences to double over the next five years to £5.2 billion.
  • £500 million to increase the roll-out of rapid charging hubs, so that drivers are never more than 30 miles away from one.
  • £800 million to establish two or more Carbon Capture and Storage clusters by 2030

 

Health

 

  • NHS funding to increase by £6 billion over the course of this parliament.
  • NHS surcharge for new arrivals from overseas to increase to £624 with a discount for children.

 

Infrastructure

 

  • Additional funding of £640 million for Scotland, £360 million for Wales and £210 million for Northern Ireland.
  • West Yorkshire to have directly elected mayor who will share extra £4.2 billion with other metro mayors (Greater Manchester, Liverpool City Region, West Midlands, Tees Valley, Tyne and Wear, Sheffield City Region, West of England) for transport investment.
  • £27 billion investment on more than 4,000 miles of roads.
  • £5 billion of funding for gigabit-capable broadband.
  • Additional £1.5 billion to be made available for further education funding.
  • More than 750 staff from Treasury, business and trade departments to move to north of England. More than 22,000 civil servant roles to move outside central London in the long term.

 

Housing

 

  • £1.1 billion from housing infrastructure fund to build around 70,000 new homes in high demand areas.
  • Building safety fund worth £1 billion to be used to remove cladding from tall residential buildings.
  • £650 million fund to help rough sleepers into accommodation

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