Important Budget a distant memory
Although the Budget has been overtaken by subsequent events, it is worth remembering the speech contained important announcements for both business and individuals. LSCA Taxation Committee chair Gay Jordan reports from the society’s post-Budget breakfast.
Setting out the economic context of the Budget at the LSCA’s annual breakfast event, Iain Wright, ICAEW’s Director of Business and Industrial Strategy, said that front and centre was Covid-19, which had of course caused a lot of rethinking. However, Chancellor Rishi Sunak had given a very impressive speech and looked fully in charge.
In the short term, businesses would be greatly reassured by the government’s £30bn pledge to support the UK economy during the coronavirus crisis. New measures announced by the Chancellor, working closely with the Bank of England, such as the temporary relief on business rates and the coronavirus loan scheme, would hugely benefit smaller firms, particularly in terms of managing cash flow at a time of abrupt falls in demand.
Iain continued: “Meanwhile, the long-term commitment to investing in start-ups, scale ups and research and development is encouraging, as is the desire to level up spending across the country. Powering up the low carbon economy is a genuinely game-changing opportunity for businesses, which will lead to new markets and new forms of prosperity, as well as being sustainable.
“This determination for government to work closely with business should increase productivity across the country, with consequent real increases in the standard of living for all.”
Iain concluded that this was the end of the austerity regime and the largest Budget giveaway since 1992. “However, with no real tax increases announced, there needs to be a greater clarity on how these big spending pledges will be funded. It appears from first glance of the red book that most of today’s commitments are funded through extra borrowing; indeed, the greatest amount of borrowing and spending in a generation. This will result in government debt exceeding £2 trillion by the middle of the decade for the first time.”
Summarising the key tax points, Sue Moore, Director of Sue Moore LLP, agreed that the Chancellor had delivered an excellent speech and had addressed the coronavirus issue with temporary measures which would help both small businesses and employees.
However, she said that, beyond these measures, there had been very little in the way of tax changes that were not known about already, and some expected reforms had not happened. No changes had been announced regarding IHT, despite the large Office of Tax Simplification reports on administration of the tax and the tax itself. There had been a few green measures announced, but others would be subject to future review and consultation.
Sue continued: “Entrepreneurs’ relief took a hit, falling to £1m as HMRC reports that it is still being abused, and the savings will be used to fund three other significant tax breaks for businesses. The threshold for pension contribution tax relief increased by £90,000.
“Sadly, however, there was no delay regarding the off payroll working rules in the private sector, nor is there to be a delay on the reporting and paying within 30 days for CGT on residential property.”
Subsequent to the breakfast briefing, the chancellor revealed that the off payroll working rules would in fact be delayed by a year.
“Lots of consultations were announced, so I suspect the tax changes will come in the Autumn 2020 Budget. In the meantime, this Budget gave us exactly what we often ask for, no changes please.”
The Breakfast was held on 12 March 2020 at The Carlton Club, St. James’s Street, London SW1A 1PJ. As in recent years, it was presented in conjunction with the City Branch of The Institute of Directors and was introduced and chaired by Adrian Mansbridge, Chairman of the LSCA’s Taxation Committee. The closing remarks were given by Alderman Alastair King, Chairman of the IoD City Branch.
For further details about the LSCA Taxation Committee, please contact Gay Jordan. Gay Jordan is Secretariat Consultant of the LSCA.
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