2020 Budget Overview
Today saw the Chancellor, Rishi Sunak announce his first budget. He detailed the Conservative Government’s plans for the upcoming year, which we have summarised in this post. Coronavirus help was top of the agenda in many ways and this followed the earlier announcement from the Bank of England to reduce interest rates to 0.25%. He confirmed the Bank of England and the Government would continue to work together to protect the economy.
Coronavirus
A £30bn fund had been announced to help the economy get businesses, individuals and the economy generally through the coronavirus issues we face. The budget aims to help individuals, businesses and public services.
For individuals:
- Those who have been advised to self-isolate will be paid statutory sick pay, even if they have not shown symptoms
- Self-employed workers will be able to claim contributory Employment Support Allowance, as they are not eligible for statutory sick pay
- The Employment Support Allowance will now be available after a day, instead of after a week.
For Business:
- Statutory sick pay payments will be refunded to companies with less than 250 staff for up to a two week period
- Loans of up to £1.2m, for ‘business interruption’, will be available for small firms from banks
- Firms in retail, leisure and hospitality sectors will see their business rates in England be abolished if their rateable value is below £51,000
Public Services and more:
- The NHS and other public services will receive an emergency £5bn fund
- Councils will receive a £500m hardship fund to help vulnerable people.
Taxes, Wages and Pensions
- 500,000 employees will save over £100 a year as National Insurance Contributions tax threshold is set to rise to £9,500 from £8,632.
- The Tampon Tax, which is a 5% VAT on women’s sanitary products, is to be abolished
- National Living Wage will rise from £8.21 to £8.72 for over 25’s there are also increases for those on the national minimum wage.
- Recalculation will take place for high earner’s tax paid on their pensions.
- IR35 will be introduced to the private sector from April 2020 and it will apply to large and medium sized businesses. There were no significant changes to this announced despite companies being very unhappy at its introduction and concerns about the affects it could have.
Alcohol, Pubs and Tobacco
- The rise in beer duty will not go ahead as previously planned
- Duties for ciders, wine and spirits will also be frozen
- Pubs’ business rates discount will rise to £5,000 from £1,000
- There will be a 2% rise in the tax of tobacco, which will increase the price of 20 cigarettes by 27 pence and a pack of cigars by 14 pence
Some of these changes are hoped to help the struggling public house market and may hopefully avoid further closures.
Fuel Duty
- Fuel duty will remain frozen for the 10th consecutive year.
This will help hauliers who struggle with ever increasing costs which in turn affects employees within the haulage and transport industries.
Environment
- Funding for green transport solutions will be raised by £1bn
- The red diesel tax relief will be scrapped for most sectors, but will remain for agriculture, rail, fishing and domestic heating. The change will take place in 2022.
- April 2022 will see the introduction of a plastic packaging tax
- A charge of £200 per tonne will be placed onto business who manufacture and import products containing less than 30% recyclable material
- For those communities affected by the winter flooding a £120m emergency relief fund will be made available and a £200m fund for flood resilience.
- Flood defences will be doubled to £5.2bn over the next 5 years.
- 30,000 hectares of new trees will be planted and a £640m fund to protect natural habitats will be made available.
Business
- The lifetime allowance of Entrepreneur’s Relief will be reduced to £1m, down from £10m
- A £3,000 grant will be available for those firms eligible for small business rates relief
- Business rates for retailers will be abolished for this year.
Technology and Science
- £5bn to be spent trying to get the hardest-to-reach places gigabit-capable broadband
- £1.4bn funding boost to be given to the Science Institute in Weybridge, Surrey
- Research into nuclear fusion, space and electrical vehicles to be given an additional £900m in funding
- Digital publication’s VAT to be abolished from December 2020.
Housing and Infrastructure
- By the middle of 2025, £600bn is to be spent on roads, rail, broadband and housing
- £27bn budget for motorways among other key roads, such as the new tunnel near Stonehenge
- 6,000 extra places will be provided for rough sleepers and a £650m fund to help tackle homelessness
Any private and public housing taller than 18m will have all unsafe combustible cladding removed, through a new £1bn fund.
For further advice regarding employment law changes arising from the Budget please contact our employment law team:
Amy Hallam
Head of Employment
0114 3496989
amy.hallam@brmlaw.co.uk
