With the recent announcement of a step-by-step plan out of lockdown from the Prime Minister, many will be keen to find out what the Spring 2020 budget’s key priorities will be.
On Wednesday 3rd March, the Chancellor of the Exchequer, Rishi Sunak, will lay out the financial plans for the economy to enhance the coronavirus recovery and battle turbulent restrictions stemming from Brexit.
So what can we expect?
- Freeports- The government is expected to discuss the allocation of new freeports following Britain's departure from the EU. This will allow certain zones to trade without paying tariffs, which will in turn create jobs, encourage economic growth, drive investment and uplift communities.
- Corporation tax- Although not certain that it will be mentioned in this budget, there have been rumours around a 1% tax hike amidst the surge in online shopping brought on by the national lockdown. However, this will only apply to the companies that have reported a notable increase in sales.
- Extended furloughs- For businesses, such as hospitality, disproportionately impacted by lockdown and other restrictions, they may benefit from a proposed furlough extension past the 30th of April.
- Stamp duty- The introduction of the stamp duty holiday which saw no tax charged on the first £500,000 of a property purchase, was hugely successful. As a result, there have been calls to extend this scheme for at least a further six weeks.
- Initiatives to attract investment- This initiative also includes the allocation of freeports, in addition to energy savings mechanisms to reduce the UK’s carbon footprint and R&D into digital technology.
- Self-employed support- The support given to the self-employed is substantially different from those who are employed. Those who are self-employed have been entitled to grants between 70-80% of their usual income. As many support measures are due to come to an end in April, we will need to see what mechanisms are put in place to further help this category out.
- Pension tax relief- Unpopular amongst higher-rate taxpayers; there are rumours that Sunak will announce a 25% flat relief rate as the current rates favour higher-rate taxpayers. This will be a better incentive for basic ratepayers.
- Capital Gains Tax (CGT)- The office for tax simplification (OTS) have been looking at more productive ways to measure and collect tax. This includes cutting the current annual tax-free allowance from £12,500 to £2,000. Although this seems drastic, it will be an option to gain a substantial amount of cash the UK needs to pay its debts accumulated as a result of lockdown.
- Personal Allowances- The personal tax allowance is £12,500 and usually increases annually to be in line with inflation, however this year it is believed that it will be held steady.
- Lifetime ISA penalties- Currently, the penalty for withdrawing from a Lifetime ISA unexpectedly is a 20% fine (previously at 25%). This has decreased due to the financial turbulence Covid-19 has caused the economy. Whether this becomes permanent or the charges hike back up to 25% is unknown, yet could be something mentioned on Wednesday’s budget reveal.
- Fund to help the high street recover- Sunak has revealed in advance of the budget that the UK will establish a £5 billion fund to boost the high street including the hospitality industry. Both have been shattered financially by the national lockdowns.
- Fintech Visas- For skilled migrants, special fast track visas will be implemented, so that they can work in the UK Fintech industry.
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