A seamless budget? Chris Humphreys takes a look at this year’s Budget in more detail
In delivering his second Budget the Chancellor of the Exchequer Rishi Sunak continued his seamless progression towards Number 10 with a polished delivery that made frequent use of the words “honest”, “fair”, “determined” and “generous” and an absolute commitment to do whatever it takes and to leave no one behind.
Against a backdrop of government borrowing unprecedented since World War II, the Chancellor introduced a number of measures looking to balance his three objectives of:
- Protecting businesses and individuals.
- Fixing Public Finances.
- Building a future sustainable economy.
Whilst many of these had been leaked in advance key measures announced included
- Extension of the Furlough Scheme until September 2020 but with the accompanying stick of additional resourcing to HMRC to investigate fraudulent or incorrect claims.
- Extension of the Self-Employed Income Support Scheme also until September 2020 and in doing so the welcome removal of the anomaly which prevented businesses started in 2019/2020 from claiming.
- The introduction of a recovery loan scheme to follow on from CBILs and the Bounce back loan, which will enable businesses of any size to borrow between £25,000 and £10,000,000.
- A super-deduction for qualifying capital expenditure of 130% to persuade businesses to invest and innovate from 1 April 2021.
- The extension of the £500,000 nil rate Band limit for Stamp Duty on residential property purchases until 30 June 2021 with a transitional limit if £250,000 until 30 September 2021.
- An extension to the business rates holiday until 30 June 2021 with a 75% discount from then to the end of the year.
- An increase in the rate of corporation tax to 25% from 1 April 2023 for businesses with profits of more than £250,000 with a return to the marginal rate calculation for profits between £50,000 and £250,000.
- The freezing of rates and allowances in relation to Income Tax, Capital Gains Tax, Inheritance Tax, VAT, and the Lifetime Pension Allowance.
It is likely that the Chancellors steady hand and measured delivery will see this Budget being generally well-received, but the anticipated debt level of £407bn by the end of next year does cause some concern particularly considering that a 1% increase in interest rates or inflation leads to an increase annual funding cost of £25bn.
Only time will tell if the increase in corporation tax rates and the freezing of allowances enable the Chancellor to meet his objectives and whilst there are no hidden tax takeaways it is possible that we will need to wait until the Consultation Day on 23 march before we get a clearer indication whether the only way to really fix the Public Finances is to have long term increases in tax rates.
Our team are on-hand to help with any questions that you may have following this year’s budget, contact us today!