“Getting it done” is the soundbite Chancellor Rishi Sunak clearly wanted us to take away from his debut Budget speech, but “giving it away” might be more accurate.
The Government’s substantial majority gave Sunak carte blanche to overhaul taxes but, in the end, there were relatively few substantial changes.
Instead, one announcement after another was made on investment in public services, roads and railways. With the coronavirus (COVID-19) high on the agenda, there were also emergency measures designed to provide respite for beleaguered businesses and to protect jobs.
Having been forced to abandon plans to publish an economic forecast in November 2019, the Office for Budget Responsibility produced an overdue update on the future health of the economy – and it wasn’t good. Its 2020 growth forecast was cut to 1.1%, having forecast 1.4% growth last year, and that’s without taking into account the potential shock to the global economy of COVID-19.
Sunak delivered the first Budget speech since October 2018, just 27 days after succeeding Sajid Javid.
Inheritance tax may have been on Javid’s mind prior to his Valentine’s Day resignation, but not Sunak’s. Despite the Office for Tax Simplification’s multiple recommendations, no change was forthcoming.
Prior to Sunak’s speech, there was a lot of noise about the potential scrapping of entrepreneurs’ relief. Gauging public mood, Sunak went for a compromise, leaving the relief in place but lowering the lifetime allowance from £10 million to £1m.
Campaigners were also banging the drum for a revamp of the business rates system in England. Firms with rateable values of less than £51,000 in the retail, leisure and hospitality sectors won’t have to pay business rates from April 2020 for a full year.
That will buy time for a comprehensive review of business rates, which is expected to report around the time of the next Budget in the autumn.
Sunak also announced cash grants of £3,000 for businesses with rateable values of less than £15,000 and a temporary loan scheme for SMEs.
The main rate of corporation tax was due to reduce from 19% to 17% next month. That no longer goes ahead – but we knew that already.
Changes to capital gains tax will also proceed as planned. A 30-day window for paying capital gains tax on property sales kicks in from 6 April, at the same time as changes to lettings relief and private residence relief.
And, as promised in the Conservative Party manifesto before the election late last year, there were no increases to the rates for income tax, VAT or National Insurance.
Rates and allowances
The tax-free personal allowance will remain at £12,500 for the 2020/21 tax year throughout the UK.
The basic-rate band in England, Northern Ireland and Wales will stay at £37,500 and consequently, the higher-rate threshold will continue to be £50,000.
The additional-rate band in those nations will also remain at £150,000.
In Scotland, the starter-rate rises to £14,585 and the basic-rate will increase to £25,158.
The intermediate-rate will remain at £43,430 and likewise, the higher-rate will stay at £150,000. The top rate will remain in place for income over £150,000.