Budget Report 2020
Sunak delivers Budget to meet ‘challenging times’
Chancellor Rishi Sunak delivered his first Budget, and the first since the UK’s departure from the European Union, against the backdrop of the coronavirus outbreak.
The Chancellor announced a £30 billion stimulus package to support the economy through coronavirus contagion and pledged to give the NHS whatever extra resources are needed to cope.
Following the news that the Bank of England had reduced interest rates to 0.25%, in an emergency response to the coronavirus, Mr Sunak put further measures in place.
These include Statutory Sick Pay (SSP) for employees who are advised to selfisolate, even if they are displaying no symptoms. The government will also meet some SSP costs for businesses. In addition, business rates for shops, cinemas, restaurants and music venues in England with a rateable value below £51,000 have been suspended for a year. This tax holiday will be worth up to £25,000 to thousands of businesses across the retail, leisure and hospitality sectors.
Citing the latest economic forecasts from the Office for Budget Responsibility, Mr Sunak said the economy is predicted to grow by 1.1% this year. However, the GDP forecast does not fully account for the impact of coronavirus.
Turning to duties, tax on beer, wine, cider and spirits have been frozen while tobacco duty will continue to rise by inflation plus 2%. Fuel duty will also remain frozen, for a tenth consecutive year, despite widespread speculation that it would rise. However, Mr Sunak introduced other green measures including a new tax on plastic packaging and freezing the climate change levy on electricity while raising it on gas. The Chancellor also promised to spend £500 million to support the rollout of new rapid charging hubs for electric cars.
In addition, Mr Sunak resisted calls to end Entrepreneurs' Relief, although the lifetime allowance will be reduced from £10 million to £1 million. The Chancellor will abolish the so-called ‘tampon tax’, reducing the VAT rate on sanitary products to zero from 1 January 2021, as well as scrapping VAT on digital e-publications, including e-books, e-newspapers, e-magazines and academic e-journals, from 1 December 2020.
The Budget confirmed increased spending on infrastructure projects including broadband, railway and roads. £5 billion was promised to get gigabit-capable broadband into the hardest to reach places and £510 million of new investment into the shared rural mobile phone network.
Spring Statement 2019
Chancellor delivers Spring Statement amid 'cloud of uncertainty'
Chancellor Philip Hammond's second Spring Statement was delivered against a backdrop of political turmoil, following the voting down of Prime Minister Theresa May's Brexit withdrawal deal.
Despite describing the economy as 'remarkably robust', the Chancellor offered a clear warning on the potential impact of a no-deal scenario, which he said would put progress on the public finances 'at risk' and cause 'significant disruption' to the UK economy.
The latest forecasts from the Office for Budget Responsibility (OBR) revealed mixed news on the economy, with the OBR revising down its previous UK growth forecast for 2019 from 1.6% to 1.2%. Meanwhile, the forecast for government borrowing has also been revised down from £25.5 billion to £22.8 billion, with the Chancellor heralding rising wages and a strong employment market.
However, Mr Hammond emphasised the importance of a smooth Brexit transition in securing economic stability, pledging that a £26.6 billion 'deal dividend' would be made available to help boost the economy, providing that an agreement can be reached. The Chancellor also confirmed that a full Spending Review will conclude alongside the 2019 Autumn Budget.
Turning to other issues, the Chancellor announced new government investment in the UK's physical and digital infrastructure, technology, housing and the environment, together with a bringing forward of the £700 million reforms for business apprenticeships previously announced in the 2018 Autumn Budget.
The Chancellor's statement also confirmed that the government will apply a 'light touch' approach to penalties under its new Making Tax Digital regime; and promised to take action on late payments, including requiring company Audit Committees to review payment practices and report on them in their Annual Accounts.
Other measures announced include free sanitary products for secondary schools and colleges in England from the start of the next school year, and an additional £100 million fund dedicated to tackling the recent surge in serious violence and knife crime.
Read Hall Livesey Brown’s comprehensive summary and analysis of the Spring Statement 2019 by clicking here.
This Report, which was written immediately after the Chancellor of the Exchequer delivered his Budget Speech, is intended to provide an overview of the latest announcements and recent measures most likely to affect you or your business.
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Read Hall Livesey Brown’s comprehensive summary and analysis of the Autumn Budget 2018 by downloading our free report listed below:
Previous budget analysis and Autumn Statements are also available to download for your reference.