Sitting down to analyse and identify the key parts of yesterday’s Budget, the backdrop of the corona virus is hard to ignore. Chancellor Rishi Sunak, having been in the job less than a month following former-Chancellor Sajid Javid’s resignation, must have been thinking a similar thing as he got closer and closer to the date of his first real test…
Hats off to Sunak though; his plan not only aims to address and combat the effect the virus is having on the economy, but he’s also managed to include some non-virus-related measures, too.
With that being said, the main talking point to come out of yesterday’s speech was understandably the huge, £30bn fiscal stimulus package. It’s this ‘package’ that involves all the different little policies and rule changes that the government is planning to, or they already have, put in place to combat Covid-19. The package includes things such as a £5bn emergency response fund for the NHS, a £500m ‘hardship fund’ for councils in England, and an offer to all small businesses of up to £1.2m each in a “business interruption” loan, amongst other things.
Outside of the corona-fighting package, the Chancellor made a number of other tweaks to economic policy, with the key rule changes that could relate to our clients being as follows:
- A change to Pension Tax Relief Allowances – the two tapered annual allowance thresholds will rise by £90,000. This is welcome news for those high earners working in the NHS and elsewhere;
- An increase in the Lifetime Allowance. In 2020/21 the allowance will increase in line with CPI, rising to £1,073,100 - this is slightly higher than expected;
- A reduction in the lifetime limit for gains qualifying for Entrepreneur’s Relief – reducing from £10,000,000 to £1,000,000;
- A surprise increase to the Junior ISA limit – increasing from £4,638 to £9,000; and
- An intention to consult on the net pay tax relief issue to provide a solution for lower earners contributing to workplace pension schemes set up on this basis.
It’s looking like there is still a lot more uncertainty and scepticism about the virus, and nobody is really too sure about how it will pan out over the coming weeks and months. At the very least, yesterday’s announcement has formalised the government’s plan of action between now and the Autumn Budget, and provided those working at the frontline of this disease, i.e. the NHS, with some much-needed relief.
As always, if you want to have a chat with one of our helpful Advisers about things, we’d be more than happy to help.
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