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A Budget for Future Prosperity
Set against the background of the impact of the coronavirus COVID-19, the March 2020 Budget delivered a mix of short term economic measures alongside long term growth goals. Even before the Chancellor, Rishi Sunak, had got to his feet we already knew that the Bank of England had announced a 0.5% cut in interest rates, bringing them back to 0.25%. This, the Chancellor highlighted, was just one of a package of measures which the Government and the Bank of England working in tandem had taken to alleviate the coronavirus impact.
Indeed the Chancellor acknowledged that the coronavirus would have a significant impact in the short term. However he also highlighted the Office for Budget Responsibility’s (OBR) view that the impact was likely to be temporary. Accordingly, alongside a commitment to provide the NHS with whatever resources were needed to fight the virus in the short term and measures to help businesses, the Chancellor also announced a series of long term investments across infrastructure, research, housing, education, and the green sector.
The South West will benefit from some these projects including a commitment to the A303 road improvement scheme, moneys pledged to improve 4G broadband coverage, and an increased focus on flood defences. South West businesses and individuals will also benefit from measures to alleviate the impact of coronavirus including:
- The business rate retail discount for retail properties with a retail value of less than £51,000 to be extended to the leisure and hospitality sectors and increased to 100% for 2020/21. In addition, the business rate discount for pubs with a rateable value below £100,000 is to be increased to £5000 for the same tax year. Businesses eligible for small business rate relief could also benefit from £3000 of grant funding.
- Employers with fewer than 250 employees will have statutory sick pay costs of up to 14 days refunded by the government, provided that absence is related to COVID-19.
- The setting up of a coronavirus business interruption loan scheme.
Businesses and individuals in financial distress and with outstanding tax liabilities as a result of COVID-19 will be able to access a dedicated HMRC helpline. This will provide support including negotiation of a deferred tax agreement and the waiving of late payment penalties and interest where delays in contacting HMRC or paying taxes is due to the virus.
Prior to the budget there was much talk about the possible abolition of entrepreneurs’ relief. The relief has been retained but with a lower lifetime limit of £1 million. In line with previous announcements the R&D expenditure credit allowance is to rise from 12% to 13%, the structures and building allowance from 2% to 3%, and the employment allowance from £3000-£4000.
Other highlights in respect of taxes include:
- An increase in national insurance threshold to £9500 with effect from the 2020/21 tax year.
- The freezing of whiskey, beer, cider, wine and fuel duty.
- A zero rate of VAT to be applied to e-publications with effect from December 2020.
- The abolition of the tampon tax with effect from January 2021.