Budget 2020 – Getting It Done!
New Chancellor, Rishi Sunak, delivered his first Budget address, with the persistent clarion call being “getting it done”. So, did he deliver?
The headline grabber in tax terms was the immediate reduction in the lifetime allowance for Entrepreneurs’ Relief to £1m from the previous £10m. The other measure that perhaps might concern some taxpayers was the announcement that huge investment in further targeting tax avoidance was to be made. Responsible tax planners should not be worried, and commerciality must underpin any future planning undertaken.
Sometimes Budgets are more notable for what was not said, such as no further mention of the new IR35 rules to be implemented from 6 April 2020. For capital expenditure, the Chancellor was also notably silent on whether the Annual Investment Allowance (AIA) of £1m would be extended beyond 31 December 2020, but perhaps this will be dealt with in the Autumn 2020 Budget. Inheritance Tax too, touted to be overhauled, was not mentioned. However, one announcement by way of confirmation was that corporation tax would be held at 19%.
Some examples of tax ‘giveaways’ included:
- NIC threshold raised to £9,500 from £8,632
- RDEC credit for large R&D companies to be raised to 13%
- Employment allowance raised to £4,000 from £3,000
From the expectation that this Budget would deliver seismic changes to the UK tax system, it would be debatable to conclude that the Chancellor “got it done” but if stability was your hope, the lack of major change does allow businesses to continue, largely unaffected, other than those selling their businesses perhaps.
Mr Sunak delivered the Budget with youthful exuberance and announced a series of populist investment measures, some to combat the financial effect of the Coronavirus, some with green credentials and others to freeze alcohol duties and to promote small business wellbeing.
The announcement of the day was, however, nothing to do with the Budget and all to do with the 0.5% drop in the Bank of England base rate to 0.25% with immediate effect, designed to help maintain an economic equilibrium during the current economic and health climate.
Head of EQ Taxation, David Morrison, commented,
“Overall, this Budget was much less radical than expected, but stability in the current climate seems the top priority. Perhaps more will follow later in the year…”
If you wish to discuss current or potential transactions, or any possible impact of the Budget, please contact our EQ Taxperts.