The man from Del Monte said yes… spend spend and spend again.
The UK Budget was delivered by the Chancellor Rishi Sunak on 11 March 2020 and he didn’t hold back. But was it all style and no substance?
Mr Sunak took over somewhat fortuitously from the former Chancellor Sajid Javid who resigned in controversial circumstances. Given the multifaceted threats faced by the UK, from Coronavirus to Brexit, it was fascinating to see how the rookie Chancellor would measure up.
Would he gravitate to greatness or fumble his fiscal forecasts? Here’s our Budget 2020 overview.
The Chancellor stressed his commitment to businesses. but refused to do anything about the off-payroll working (IR35) rules coming into effect in April. He also decided to ignore previous Tory promises and kept the corporation tax rate at 19%. And for small businesses, entrepreneurs’ relief limit being cut back from £10m to £1m for disposals on or after Budget Day was a welcome modification despite fears it would be abolished altogether.
He further announced an increase in the structures and building allowance from 2% to 3% with effect from 1 April 2020.
One of the surprises of the Budget was the announcement that the current zero-rating of books and printed matter will be extended to their e-equivalents. This change will apply from 1 December 2020, a slightly surprising date although this rate has been permissible under EU law since late 2018.
Many were pleased to see that VAT postponed accounting will be adopted from 1 January 2021 although, ironically, that is permissible under EU law in any case.
There was not much in the way of announcements on the personal tax and national insurance front. The current NIC threshold will be increased from £8,632 to £9,500 from 6 April 2020.
Crucially however, the pensions annual allowance thresholds will be increased by £90,000 each. Thus, the threshold income will now be £200,000 rather than £110,000 and the adjusted income from £150,000 to £240,000. This is a welcome announcement primarily for GPs caught by the pension tax trap, although it remains to be seen how it affects things in practice.
Making Tax Digital
Many industry commentators suggested that the Government should review the rollout and costs to business of MTD for VAT before it decides to extend it to other taxes. It was therefore welcome that the government decided to publish an evaluation of the introduction of MTD for VAT. Many believe that there should be a cost/benefit review as to whether it is fit for purposes for UK businesses.
After delivering his maiden speech amidst considerable uncertainty with some bravura and gusto – including one piercing jibe at the Shadow Chancellor – one can’t help but wonder that the jury is still very much out. As the Red Book is pored over in the coming weeks and months, we will know more for sure.