The Chancellor of the Exchequer, Rishi Sunak, delivered the 2020 Budget amid continued pressure from the coronavirus outbreak and less than a month after taking over the Treasury.
The Chancellor’s main focus was on tackling the economic challenge posed by the coronavirus, announcing a number of measures including an emergency response fund to support the NHS, enhanced sick pay, freezing fuel duty, and targeted measures to aid business cash flow.
He also abolished business rates for many small businesses for the next fiscal year to help support the economy during this uncertain time.
Aside from the measures relating to coronavirus, the Chancellor also announced a number of other changes focused on achieving future prosperity. These included R&D investments, increases to the National Living Wage and National Insurance thresholds, and investment in roads, rail and green transport.
With the potential for a fifth of the workforce to be unable to work at any one time, the Chancellor unveiled a £30bn package to help combat coronavirus, which focused on supporting the NHS, the people affected by the virus, as well as businesses. The plan includes:
Business rates for firms in the retail, leisure and hospitality sectors with a rateable value below £51,000 have been abolished for the next fiscal year in a bid to support the economy during the coronavirus outbreak.
The business rates discount for pubs with a rateable value of less than £100,000 will increase from £1,000 to £5,000.
Headline corporation tax rate will remain at 19% in 2020, and the annual rate of the structures and buildings allowance will increase to 3%.
R&D investment will increase to £22billion a year. There will also be an increase in the rate of the R&D expenditure credit from 12% to 13%. An extra £900m pledged for research into nuclear fusion, space and electric vehicles.
Entrepreneurs’ Relief will be retained but the lifetime allowance significantly reduced from £10m to £1m.
National Insurance contributions (NICs) tax threshold – the Budget confirmed that the National Insurance contributions (NICs) Primary Threshold and Lower Profits Limit, for employees and the self-employed respectively, will increase from £8,632 to £9,500 from April 2020. This increase will benefit around 31 million people, with a typical employee saving around £104 and a typical self-employed person around £78 in 2020-21.
National Living Wage (NLW) – with plans already in place to raise the national living wage to £8.72 an hour from April 2020, the chancellor revealed in the budget that the NLW is currently projected to be almost £10.50 an hour by 2024.
0.5% VAT on women’s sanitary products, often referred to as the tampon tax, is to be scrapped.