The first Budget of UK’s Government as a non-EU state is just a day away. The new chancellor Rishi Sunak will deliver the financial statement on March 11.
What are the expectations from The Budget 2020?
Mr Sunak will commit to enshrining cash’s protection in law. So,Treasury will begin talks with industry and regulators immediately after the Budget on Wednesday.
The Chancellor is set to abolish the 5% rate of VAT leveled on sanitary products – commonly known as the ‘tampon tax’ – from next January.
National Insurance and the budget
Boris Johnson controversially promised a tax cut for high-earners during his Tory leadership campaign.
But those plans were ditched in the run-up to the December general election.
Now, the focus is on raising the threshold for National Insurance contributions (NICs) to £9,500 in the next tax year. Further, to £12,500 over a number of years.
Expectation from Mr Sunak is to confirm £5bn investment to bring faster broadband to the nation by 2025.
This will firm up a Conservative election pledge which the government hopes will benefit over five million homes and businesses.
According to The Guardian, a Number 10 source said that the Budget would ‘prioritise economic security’ in the face of the growing threat from the coronavirus.
So,the government may postpone some major announcements to a future Budget or Autumn Statement.
The exact coronavirus-related measures that the Budget will include are unclear.
However, Sunak has ‘ordered Treasury officials to work up plans to support the public health response, businesses and the economy in his Budget on 11 March’.
Former Chancellor Sajid Javid was expected to cut entrepreneurs’ relief. It’s a tax break that allows company owners to pay less capital gains tax when selling their businesses.
The government confirmed it will roll out changes to off-payroll working rules known as IR35 in time for the next tax year.
See also Sunak’s promise on IR35 Reforms.
A cross-party group has called for a large cut to inheritance tax, and a shake-up to the way it works.
At the heart of these proposals is a plan to cut inheritance tax to 10%, down from its current rate of 40%.
Moreover,they will drop a number of tax-free allowances.
Boris Johnson and Sajid Javid were considering collecting a ‘mansion tax’ from homeowners with larger properties, sources told The Telegraph.
There’s little detail on its implementation.However, the revelation has met resistance from Conservative MPs who would usually oppose this kind of policy.
Pension Tax Reforms
Government is considering reforms to pension tax relief as a money-raising measure, the Financial Times reports.
Currently, workers receive pension tax relief at the rate they pay income tax.
So, basic-rate taxpayers receive 20% pension tax relief and higher-rate taxpayers 40%.
The queen announced her government would ‘take steps to support homeownership, including by making homes available at a discount for local first-time buyers’.
The Conservatives have pledged to give at least a 30% discount to this group of aspiring homeowners.
Yet, the lack of detail so far has raised questions over how this plan will work.
The social care crisis is one of the key issues facing the UK.
The Queen’s Speech said the government will ‘ seek a cross-party consensus ’ on social care reform and ensure no one will have to sell their home to pay for social care.
The Budget is the chancellor’s opportunity to allocate funding to this process.
Hence,all eyes are now on Rishi Sunak who will deliver the first budget of his government tomorrow.
Please contact the careaccountancy help line for specialist help in making a disclosure or any other tax matter.