Budget 2020: What It Means for You
12th March 2020
With the country in the grip of a loo roll panic and the very real threat of a serious and widespread disease outbreak, the 2020 Budget was always going to be a bit of a drama. On top of that, the guy stuck delivering it's only been in the job a few weeks, after a serious flap between numbers 10 and 11 Downing Street saw his predecessor Sajid Javid quit on the spot.
So, here are some of the biggest headlines from yesterday's announcements.
COVID-19's a big deal
A lot of new Chancellor Rishi Sunak's speech had to do with the effects of the ongoing coronavirus outbreak on the UK economy. There's a lot of worry around the country, with people panic-buying and businesses fretting about sick staff and self-isolating customers or suppliers. We still don't have a clear picture on where this is all going, but the people in charge of the economy do at least seem to be taking the situation fairly seriously. Statutory Sick Pay's getting some new rules, so that people who've been advised to seal themselves off for a while aren't left unsupported. We'll also be able to get sick notes without having to risk spreading the bug to the entire GP's office, by using the 111 phone service.
Obviously, none of this does much good for the millions of self-employed people who don't qualify for Statutory Sick Pay. Instead, benefits payments will be speeded up until the situation blows over. In addition, smaller businesses employing under 250 people will have the sick pay they're paying out refunded in full for up to 14 days.
Shifting the Minimum Wage and National Insurance goalposts
After April 2020, the National Living Wage will be going up to £8.72 per hour. That may seem like a pretty small adjustment from the previous figure of £8.21, but it's an increase of over 6%, or £930 extra a year, so it's not to be sneezed at (coronavirus notwithstanding). Younger people on the lower National Minimum Wage won't be missing out, either. Depending on their age, they'll see an increase of between 4.6% and 6.5%.
As for National Insurance Contributions, over 30 million of us will be paying less each year as a result of the new Budget. The threshold for paying those 12% NICs is rising by close to a grand to £9,500. For self-employed people who pay Class 4 NICs, the change will be a little less dramatic, but they'll still generally end up £78 per year better off.
So, what about the State Pensions that those NICs are supposed to go toward? Well, the good news for everyone earning less than £9,500 is that they won't be losing their entitlement just because they're no longer paying National Insurance. The State Pension itself is set to rise to £175.20 a week in April, so keeping that entitlement is going to be a relief to lower-earning workers.
Speaking of relief...
The lifetime threshold for Entrepreneurs' Relief is one of the biggest casualties of this Budget, being hacked down from £10 million to just £1 million. This is the tax break that halves the Capital Gains Tax business owners pay when they sell up. The Treasury's looking to gain over £6 billion over 5 years with this move, but the relief should still be able to serve its main intended purpose – to help people start up new businesses in the UK.
The usual suspects...
The country always braces hard for tax increases on fuel, alcohol and tobacco around Budget-time. This year, though, there really wasn't a lot to stress about for most people. Beer, wine and cider won't be seeing any rise in the taxes slapped on them. The same goes for fuel, which is good news for the millions up and down the UK who travel as an essential part of their work. That's a decade on the trot that fuel duty's been frozen, and a key manifesto promise kept.
Smokers won't be celebrating quite as hard, though, with additional duty whacked on all tobacco products from top to bottom. There's a 2% rise on cigarettes and cigars, and a 6% rise on hand-rolling tobacco.
Bits and pieces.
Every Budget has a pick-n-mix section of miscellaneous tweaks and adjustments, and this one's no exception. The immensely unpopular 5% “tampon tax” on female sanitary products is being abolished, for one thing. While this only really means saving a relatively modest lifetime average of £40 per person affected, it's still a significant move to correct a tax that saw these products classed as if they were “luxury goods”. Meanwhile, people who work from their homes – something that a lot more of us might be doing in the near future – are getting a bit of a boost. The flat-rate deduction they can claim is going up by 50% from £4 to £6 per week.
Those are some of the major points presented by Rishi Sunak's debut Budget. As always, check in with RIFT with any questions, problems of worries you have about tax refunds or your finances. In the meantime, stay safe, wash your hands and remember that you're always better off with RIFT.