The tapered annual allowance has been ‘significantly increased’ by the Chancellor after the previous rules left senior NHS staff with hefty pension-related tax bills due to working extra shifts.
Sunak said in his Budget speech: “The pensions tax system is preventing doctors taking on more hours. To significantly reduce the amount of people the tapered annual allowance affects, I am increasing the taper threshold by £90,000 removing anyone with income below £200,000.
“Based on their vital work for the NHS, that will take around 98% of consultants and 96% of GPs out of the taper altogether.”
The Chancellor has pledged to reduce the Entrepreneurs’ Relief lifetime limit from £10m to £1m. He described Entrepreneurs’ Relief in its current form as “expensive”, “ineffective” and “unfair”. Despite calls to scrap the relief entirely,Sunakk said he would instead cut the lifetime limit by £9m. Entrepreneurs’ Relief is applied when a business owner decides to sell or liquidate their business. It enables company founders selling their businesses to pay capital gains tax at a rate of 10% as opposed to the typical 20% that usually applies to gains of up to £10m.
HM Treasury has also promised to raise Junior ISA and Child Trust Funds CTFss) saving limits to £9,000 a year from 2020/21. The accompanying Budget documents revealed the amount families will be able to save into a JISA or CTF will be more than doubled in 202/21. This will take the total amount families and children are able to save tax-free from £4,368 to £9,000.
The topic of the moment. After the Bank of England dropped base rates by 50bps, Sunak committed a £30bn fiscal stimulus package to tackle the economic impact of coronavirus, promising “to keep this country and our people financially secure”. Among the spending pledges is a £2bn cash injection into 700,000 of the UK’s smallest business, and £7bn of support for the self-employed, businesses and vulnerable people.
There will also be a £5bn “emergency response fund”, which could “go further if necessary”, in addition to a “fiscal loosening” of £18bn. To cushion the impact on smaller businesses, those with fewer than 250 employees will be refunded for any sick pay up to 14 days, amounting to “up to £2bn for up to two million businesses”.
The Office for Budget Responsibility (OBR) provided growth forecasts for the UK of 1.1% in 2020, 1.8% in 2021, 1.5% in 2022, 1.3% in 2023 and 1.4% in 2024, although these projections do not allow for the potential impact of the Coronavirus outbreak.
As a proportion of GDP, borrowing will jump from 2.1% this year to 2.4% and 2.8% in the next two years respectively, before falling to 2.5% the year after.
The government has confirmed it has increased the National Insurance (NI) threshold from £8,632 to £9,500 from April. The Chancellor said the move would mean those earning under £9,500 would pay no NI whatsoever, saving 31 million people across the UK up to £104 a year.
Chancellor Sunak sought to beef up its net zero transition, unveiling a raft of new green spending plans and policy moves.
He dedicated a lengthy section of the Budget to the government’s climate plans, announcing new measures to step up clean tech R&D, increase taxes on pollution, accelerate the roll out of electric vehicles, double flood defence spending over the course of the Parliament, and deliver new funding for carbon capture and storage projects and nature-based emission reduction initiatives.
Meanwhile, Sunak also confirmed plans to move ahead with the government’s manifesto promise to introduce a new plastics packaging tax, confirming that from April 2022 the government will charge manufacturers and importers £200 per tonne on packaging made of less than 30% recycled plastic.
The government is consulting on measures which will allow UK investors to continue to access EU-domiciled funds after the Brexit transition period at the end of this year.
The Overseas Funds Regime (OFR) would see HM Treasury grant equivalence to a country, thereby easing access to marketing in the UK, in a similar manner to that of the EU’s equivalence regime. For retail funds, OFR would enable the Treasury to apply additional requirements to funds from equivalent countries, not previously covered by existing legislation.
Chancellor Rishi Sunak only gave a vague indication of how social care funding will be tackled in his inaugural Budget.
The 2020 Budget, whichSunakk took more than an hour to deliver, made only vague references to social care funding, despite Sunak repeatedly referencing it was the Budget of ‘getting things done’.
The accompanying documents, which were released shortly after Sunak’s speech, re-outlined the government’s commitment to invest £1bn of additional funding for social care next year, which was announced last year.
The government has launched consultations on overhauling the Retail Prices Index (RPI) methodology and addressing the net-pay anomaly.
The consultation, announced as part of the budget, will cover the issue of timing, including whether the UK Statistics Authority’s (UKSA) proposal might be implemented at a date other that 2013, and if so, when between 2025 and 2030.
It also covers issues on technical matters concerning the implementation of its proposal.