Coronavirus dominates Budget with few changes for private clients
In his maiden budget, Chancellor Rishi Sunak struck a brisk, reassuring tone against the backdrop of widespread uncertainty resulting from the outbreak of Coronavirus, repeatedly echoing the Tories’ recent election pledge to “get things done”.
Inevitably, his initial focus was to lay out the government’s short-term measures to combat the challenges posed by the developing pandemic, including a £5bn emergency response fund to support the NHS and other public services in England, a £12bn fiscal stimulus package - with more available if required - and help for both businesses and individuals.
With the Bank of England dropping the base rate to 0.25% this week, the Chancellor clearly believes that low interest rates are here to stay and intends to spend seriously, while borrowing is cheap.
For private clients, there was a relatively small number of announcements, especially for the first budget of a new parliament. However, several interesting changes were made, only some of which had been announced previously.
- The lifetime limit for Entrepreneurs’ Relief is reduced from £10m to £1m in respect of disposals made on or after 11 March 2020.
- From April 2020, the annual allowance taper thresholds for pension contributions will be increased by £90,000, meaning that taxpayers’ income up to £200,000 will benefit from the full annual allowance of £40,000.
- The annual limit for Junior ISAs more than doubling to £9,000 is a surprise on the upside.
- An SDLT surcharge of 2% for non-resident purchasers of residential property in England and Northern Ireland will apply from 1 April 2021, taking the highest rate of SDLT on residential properties to 17%.
Although not a change, corporation tax rate will remain at 19% and not fall to 17% from 1 April 2020, as previously indicated.
With a few notable exceptions, revenue raising measures were limited, with borrowing being the favoured route. The reduction in Entrepreneurs’ relief is expected to raise c£6bn and a further £4.4bn raised by targeting tax avoidance, evasion and non-compliance.
With a further budget in the autumn, Mr Sunak has an opportunity to implement tax measures later in the year. It would not be a surprise to see Inheritance Tax and Capital Gains Tax come under the spotlight again.
As we near the end of the tax year and continue to deal with the impact of coronavirus on business and markets, please contact us if you wish to discuss any aspect of your financial planning.
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