The Budget 2020: A shot in the arm for the economy
Commenting on the 2020 Budget Mark Simic, partner at Exeter-based Simpkins Edwards LLP, said: “In what was billed as a budget to vaccinate the economy, the Chancellor announced a series of measures to cope with the predicted fallout from COVID-19, which Chancellor Rishi Sunak described as a serious but temporary disruption.
“Alongside an ambitious program of long-term capital investment, a £30bn stimulus package was unveiled. Business owners concerned about staff being off sick and in self-isolation will have welcomed the £2bn set aside to cover the cost of sick pay for up to 14 days, while measures to support the self-employed and those working in the gig economy were also outlined.
“In a further attempt to give businesses struggling with cash flow a shot in the arm, the Chancellor promised to scale up HMRC’s ‘time to pay’ rules, allowing struggling businesses to defer tax payments and announced a new temporary coronavirus business interruption loan scheme, to offer loans of up to £1.2m.
“Rishi Sunak also temporarily abolished business rates for those with rateable values below £51,000, doing similar for leisure and hospitality businesses with a 100% retail discount, saving businesses up to £35,000 for the next year. Businesses too small to pay business rates will receive a small business rate relief grant worth £3,000.
“Far from a traditional Tory budget, the Government has taken the view that now is the time to borrow to invest in the economy, making the most of low borrowing rates to support major projects such as road and rail infrastructure works, including a commitment to improve the A303 by funding dualling of the A303 and building a two-mile tunnel to ease traffic near Stonehenge.
“Among other areas to benefit from measures designed to stimulate the economy are start-ups, where £30m of funds have been announced. Increases in R&D relief and £5bn of investment in broadband have also been earmarked, aimed at some of the country’s hardest places to reach; which should be good news for the more remote parts of the West Country.
“Farmers and fishermen in the South West will have been relieved that plans to abolish relief on red diesel will not apply to the agriculture or fishing sector, despite plans to encourage a move away from what is seen as one of the worst polluting fuels.
“Changes to the annual allowance tapering for pensions were also announced in the context of support for NHS workers. It is believed that raising the threshold will take 98 per cent of consultants and 96 of GPs out of the taper, which has been blamed for increased NHS waiting lists.
“One other change of note was an adjustment to Entrepreneurs’ relief, reducing the lifetime limit from £10m to £1m, recognising the need to reward ‘risk takers’ while ending the aspects of the relief that have been described as unfair.
“Overall, this is a Budget overshadowed by COVID-19 but it has not gone unnoticed that extra spending on government departments and investment represented the biggest Budget giveaway since 1992. Borrowing to invest is very much back in fashion.
