Blog

2020 Budget – The Coronavirus Budget

Gary Hughes

Special Projects Manager
12/03/2020

The new Chancellor of the Exchequer, Rishi Sunak, delivered his first budget against the backdrop of the increasing coronavirus crisis, which largely dominated proceedings. He did however, on several occasions use Boris Johnson’s Brexit buzzword “get it done” to try and lighten the mood, which seemed to go down well with one half of the House anyway!

The main theme of the budget was extra help for business to tackle the coronavirus crisis. Measures include:

  • Extended statutory sick pay from day one to be refunded in full by the Government. This is however subject to certain restrictions.
  • Extended time to pay arrangements allowing businesses to defer tax payments.
  • A £500m hardship fund for local authorities to distribute to vulnerable people.
  • A coronavirus business interruption loan scheme offering an extra £1bn in overdrafts and short-terms loans through the British Business Bank.

Other key points at a glance include:

  • A business rates holiday from 1st April 2020 extended to any eligible retail, leisure or hospitality business with a rateable value below £51,000.
  • With immediate effect a reduction in the lifetime limit on which entrepreneurs relief can be claimed from £10m to £1m.
  • Corporation tax being held at 19% for financial years commencing on 1st April 2020 and 2021.
  • An increase of 1% from 1st April 2020 for the Research & Development Expenditure credit from 12 to 13%.
  • From 1st April 2020, an increase of 1% in the structures and buildings allowance from 2% to 3%.
  • An extension of the 100% enhanced capital allowances regime until at least 31st March 2021 on companies operating in enterprise zones.
  • An increase in the Employment Allowance to £4,000 from 6th April 2020.
  • The introduction of a Digital Services Tax from 1st April 2020 which will apply to businesses providing social media, search engines or online market places to UK customers. However, there are certain income thresholds which must be exceeded before this tax takes effect.
  • From 1st December 2020 digital reading, for example eBooks, will be afforded zero-rating status for VAT.
  • The employee Class 1 and self-employed class 4 NIC national insurance thresholds will increase to £9,500 from 6th April 2020.
  • From 6th April 2020 an increase in the tapered pension annual allowance thresholds to £200,000 and £240,000 respectively. However, at the same time, the minimum level of tapered annual allowance has been reduced from £10,000 to £4,000.
  • From 1st April 2021 a new 2% stamp duty land tax surcharge will apply to the purchase of residential properties in England and Northern Ireland by a non-UK resident purchaser.

This is our snapshot analysis of the budget in the immediate aftermath of the Chancellor’s speech, and further detail both on the above and other measures will be published by the Government in the coming days.

Disclaimer:

The information contained herein is of a general nature and is not intended to be received as formal professional advice. Whilst we endeavour to provide accurate information, there can be no guarantee that the information is accurate as of the date it is received, or that it will continue to be accurate in the future, due to legislative changes. It is therefore important that before you act upon any information contained herein you seek appropriate professional advice to take account of your exact circumstances.

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