It is an unbelievable 500 days since the last Budget in October 2018. The Chancellor, Rishi Sunak, has only been in the job a few weeks and to say the Budget will have represented a challenge for him is a massive understatement. Even more so given current world events.
Budget Day started with an announcement by the Bank of England that the base interest rate will reduce from 0.75% to 0.25%. This cut has been made in an attempt to help businesses by lowering borrowing costs and giving banks more flexibility over lending policy.
At the same time, the Government has announced its intention to help people during the difficult Coronavirus days ahead and to do its best to make sick pay available in a speedy and effective manner for all. It will also do its best to support small businesses by giving VAT and PAYE payment holidays. A very significant financial commitment to public services, notably the NHS, has also been made.
A central point of the Government’s economic policy is the commitment to spend a substantial amount on infrastructure projects over the next 10 years and this has apparently led to the OBR to revise its growth forecast upwards.
As far as changes to fiscal policy are concerned, the main highlights for financial planning clients were as follows:
- an increase to how much someone can earn before they pay National Insurance saving a typical employee £104 a year.
- an increase to how much gains someone can make before they are subject to tax.
- a reduction in the lifetime allowance for entrepreneur’s relief from £10 million to £1 million;
- an increase to the amount people can earn before there ability to pay into pensions reduces.;
- a near doubling in how much someone can pay into a Junior ISA.
- an improvement to the rules surrounding surrendering investment bonds.
Unsurprisingly, no changes were announced to tax rates, amounts of personal allowances or the maximum ISA allowance. Surprisingly, there was no announcement of any change to inheritance tax or even a review of the current system. But it can only be a question of time.