Fears surrounding the coronavirus (Covid 19) means the March 2020 budget addressed concerns on NHS funding and the knock-on effect for small UK businesses. Anticipated budget 2020 tax and pension overhauls and a stance on post-BREXIT changes did not transpire. The Budget itself was in stark contrast to previous releases in the face of austerity, with a £30bn fiscal stimulus promised.
But we want to know, how does the outcome of this budget effect you?
A number of budget highlights may affect your finances personally. For instance:
- The UK national living wage (formally the minimum wage) is to rise by 6.2% in 2020 with the aim of matching 2/3rds of medium earnings (£10.50 ph) by 2024
- A £5,000 discount on the business rate of tax for pubs and a freeze on wine, spirit and beer tax duties.
- Annual subscription limit for Junior ISAs and Child Trust Funds to increase from £4,368 to £9,000.
- The lifetime limit for Entrepreneur’s relief is to reduce to £1 million from £10 million.
- Stamp duty surcharge of 2% will not apply on non-UK residents purchasing residential property from April 2021.
- Tobacco duty to increase by inflation + 2% (inflation + 6% for hand-rolling tobacco) until the end of this Parliament.
But I think the most significant news in relation to the national insurance threshold increase, help for small business and a change to pension allowances, all of which appear to give us good news after good news:
National Insurance Threshold
Chancellor Rishi Sunak confirmed the National Insurance threshold will rise to £9,500 in 2020, and those taken out of paying NI won’t lose out on credits towards their state pension.
Anyone earning above the Lower Earnings Limit, which will increase with inflation from its current level of £6,136 will still be entitled to a year’s credit.
This is important because people need at least 10 years’ credits to receive any state pension and 35 years to receive the full state pension which is expected to rise to £175.20 a week from April.
Helping to support small businesses was central to this budget in a bid to help the UK economy cope with the coronavirus outbreak. Chancellor Sunak announced that business rates for most British businesses have been abolished for the next fiscal year.
Moreover, the 100% retail discount for small business (including Museums, art galleries, theatres, caravan parks, gyms, small hotels, B&Bs, sports clubs, night clubs, clubhouses, and guest houses) has been extended, and all shops, cinemas, restaurants, and music venues with a rateable value of less than £51,000 would see an increase their business rates Retail Discount to 50%.
Mr Sunak claimed the measures announced would correspond to a £1bn tax cut for businesses and pledged an additional £3,000 cash grant for smaller businesses currently eligible for the small business rates relief.
Temporarily, businesses with less than 250 employees will be covered for the cost of Statutory Sick Pay for up to 14 days with a refund from the government at 100% of SSP paid.
The chancellor also said he had asked HM Revenue and Customs to “scale up” it’s Time to Pay service, allowing businesses and the self-employed to defer tax payments over and agreed period of time. This came as he announced the taxman now had a dedicated helpline with 2,000 staff “standing ready to help”
The government will raise the two annual allowance thresholds by £90,000 in a bid to reduce the tax impact on high-earning NHS staff.
Chancellor Rishi Sunak said the threshold income would rise from £110,000 to £200,000 from the 2020/21 financial year, meaning individuals earning below this level would not be affected. The annual allowance will then only begin to taper down for individuals with an “adjusted income” above £240,000.
The government said 98% of consultants and 96% of GPs would now be taken altogether out of the taper, which currently reduces the annual allowance by £1 for every £2 earned over £150,000.
Amidst sensationalist headlines and disheartening reports, it is nice to have some good news.
We would encourage everyone to seek professional financial planning advice if, after reading this article, you are left with any concerns or questions.
Further reading is available at: