Written at the time of the budget in March 2020, I still wanted to share my thoughts at the time…
The budget, released on 11th March 2020, was supposed to be unveiled in November of the 2019. It was however delayed, due to the resignation of Theresa May in July 2019 and the shock general election (see my previous post for my thoughts on this) of December 2019.
This delayed budget has been delivered by Rishi Sunak, only a month into his role as Chancellor following the surprise resignation form Savid Javid. This late change meant that we were expecting a safe hour or so with a reduced chance of shocks that could significantly impact our clients’ financial plans.
The coronavirus was also present on the global scale, but had only had a marginal impact domestically at this point. The budget was subsequently co-ordinated with a shock interest rate cut to 0.25% (now 0.1% at the time of writing).
The big headline at the time of the election result was the long term planned infrastructure spending. This has promised spending into lots of different areas of the economy, including road, rail, housing, broadband, and research to help ‘level up’ the different regions of the UK in an effort to remain competitive on an international level in a post-Brexit world. This increased spending is set to bring many winners – from individuals through new jobs, to businesses involved with the industries that facilitate infrastructure improvements.
Other winners include:
Children and those considering legacy planning, as the Junior ISA allowance almost doubles to £9,000 per year. This has been a matter of interest in several discussions I’m already having with clients, and this new allowance creates some useful planning opportunities.
High earners with a delayed taper on how much they can put into their pension. The threshold for testing whether or not a pension contribution mechanism can be tapered has moved from £110,000 to £150,000.
Low earners will also benefit with an increase in how much they can earn before having to pay National Insurance, coupled with a rise in the National living wage to £10.50 by 2024.
However, as with all budgets, the government has tried to balance by offsetting the above measures in a number of areas. Some key hits were made which will ultimately affect many of my clients.
Business owners. There was a substantial change to entrepreneur’s relief reducing the allowance for entrepreneur’s relief (a halving in Capital Gains tax on the sale of a business) by 90%.
Inheritance tax – many were hoping for a simplification to the rules in this area, which is an increasingly important tax take for the government, but we will all have to wait for reform as the measures were muted prior to the budget.
Social care continues to be one of the most important issues to face the current generation, and despite our ageing population and shortage of provisions of care, there was no mention of this area in the recent budget.