10 Budget Changes You Need To Know

Published: 11 Mar - 2020 by Ben Rendle

From business, healthcare and housing, here's the low down on today's budget.

Coronavirus

• A fiscal stimulus totalling £30bn, including welfare and business support, sick-pay changes and local assistance.
• £7bn for businesses and families and £5bn for the NHS.
• £1bn of additional funding, including a £500m local authority hardship fund.
• Statutory sick pay will be available to individuals self-isolating. Sick notes will be available by contacting NHS 111.
• Millions working self-employed or in the gig economy will also need help. The government will make it quicker and easier to access benefits.
• Contributory employment and support allowance (ESA) will be claimable from day one, rather than day eight. The minimum income floor for universal credit will be removed. The requirement to physically attend a job centre will be removed – everything can be done on the phone and online.
 
Business Support
• £2bn of sick-pay rebates for up to 2m small businesses with fewer than 250 employees.
• £1bn of lending via a government-backed loan scheme, with government backing 80% of losses on bank lending.
• Business rates will be abolished altogether for this year for retailers, in a tax cut worth more than £1bn.
• Any company eligible for small business rates relief will be allowed a £3,000 cash grant – a £2bn injection for 700,000 small businesses.
 
Growth
• The chancellor forecasts growth before the coronavirus hit of 1.1% in 2020, then 1.8%, 1.5%, then 1.3% and 1.4% in the following years.
• In March 2019 – the most recent official growth forecasts from the Office for Budget Responsibility (OBR) – the UK economy was expected to grow at 1.4% for 2020, 1.6% in 2021, 1.6% in 2022 and 1.6% in 2023.
 
Borrowing
• A percentage of GDP will be 2.1% this year then will rise to 2.4% in 2020-2021, 2.8% in 2021-22, then falls to 2.5%, 2.4% and 2.2% in the following years. The Chancellor does not give a figure in cash terms.
• Debt as a share of GDP is forecast to fall from 79.5% this year to 75.2% in 2024-25.
• The budget is within the fiscal rules – but he will review them decide if they should change this autumn.
• He says by 2022-23 there will be “fiscal space” – spending headroom – of £12bn.
• In December 2019 – the most recent borrowing forecasts from the OBR – the UK’s budget deficit (the shortfall between government spending and tax income) was forecast to rise from £41.0bn in 2018-19 to as much as £47.6bn in 2019-20, before falling slightly to £40.2bn in 2020-21, then £37.6bn in 2021-22, £35.4bn in 2022-23 and £33.3bn in 2023-24.
• Sunak’s predecessor, Sajid Javid, had set fiscal rules that forced the government to balance day-to-day spending with tax income (excluding investment spending) by 2023.
 
Social
• A planned rise in beer duty will be cancelled, while duties for cider and wine will also be frozen.
• Exceptionally for this year, Sunak says business rate discount for pubs will be £5,000, up from £1,000.
 
Fuel Duty
• Fuel duty will remain frozen for another year. That will mean a saving of £1,200 since 2010, but at a cost of more than £100bn to the exchequer.
 
Entrepreneurs’ Relief
• Sunak says he will change entrepreneurs’ tax relief, rather than abolish it, saying he is sympathetic to the argument that it is the UK’s “worst tax break”.
• He will reduce the lifetime limit for relief from £10m to £1m. About 80% of small businesses are not affected. The reforms save £6bn over the next five years.
• He will spend these funds on business tax relief for investing in buildings, employment and research and development.
 
Environment
• Increase taxes on pollution, and raise funding for green transport solutions by £1bn.
• Abolish tax relief for red diesel for most sectors, which he says is a £2.4bn tax break for pollution. The change will take place in two years. Agriculture, rail, fishing and domestic heating will be exempt.
• From April 2022, the government will charge £200 per tonne on packaging with less than 30% recycled content.
• 30,000 hectares of trees will be planted, Sunak says – a forest larger than Birmingham – and 35,000 hectares of peatland restored.
• As trailed before the budget, the chancellor says he will double investment in flood defences over the next five years to £5.2bn.
 
Housing
• More than 750 staff from Treasury, business and trade departments will move to an economic campus in the north of England. Long-term more than 22,000 civil servant roles will move outside central London.
• Almost £1.1bn of allocations from the housing infrastructure fund will be made to build almost 70,000 homes in high-demand areas.
• Grenfell building safety fund worth £1bn. The funds will help to remove cladding from tall residential buildings.
• Almost £650m of funding will be made available to help rough sleepers into accommodation.
 
NHS
• The government will increase NHS funding by £6bn during this parliament. Reiterating campaign pledges, he says the package will help to hire 50,000 nurses and build 40 hospitals.
• The chancellor announces the NHS surcharge for people from overseas will increase to £624.
 
So, whilst the budget is a welcomed relief for small businesses on the high street, the months ahead and how the country reacts to the CoronavirusBrexit trade talks and the stock market slump are definitely going to be interesting.
 
If you need help with your business financial planning contact us today.
 
Credit: The Guardian
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