Crucial components of the 2020 budget

Chancellor Rishi Sunak on 11 March 2020 delivered a new 2020 Budget to Parliament.

Please find below our summary of the key points of chancellor’s speech.

Coronavirus

  • The government is doing everything to keep country and people healthy and financially secured
  • Fiscal stimulus totalling £30bn, including welfare and business support, sick-pay changes and local assistance, including £7bn for businesses and families and £5bn for the NHS
  • The chancellor says he believes this is larger than any other country at present

Welfare

  • £1bn of additional funding, including a £500m local authority hardship fund will be provided,
  • Statutory sick pay will be available to individuals self-isolating. Sick notes will be available by contacting NHS 111
  • The government will make it quicker and easier to access benefits for millions working self-employed
  • Contributory employment and support allowance (ESA) will be claimable from day one, rather than day eight

Business support

  • £2bn of sick-pay rebates for up to 2m small businesses with fewer than 250 employees will be made
  • The chancellor announces £1bn of lending via a government-backed loan scheme, with government backing 80% of losses on bank lending
  • Any company eligible for small business rates relief will be allowed a £3,000 cash grant – a £2bn injection for 700,000 small businesses

Growth

  • The chancellor forecasts growth before the coronavirus hit of 1.1% in 2020, then 1.8%, 1.5%, then 1.3% and 1.4% in the following years
  • In March 2019 – the most recent official growth forecasts from the Office for Budget Responsibility (OBR) – the UK economy was expected to grow at 1.4% for 2020, 1.6% in 2021, 1.6% in 2022 and 1.6% in 2023

Borrowing

  • Borrowing as a percentage of GDP will be 2.1% this year then will rise to 2.4% in 2020-2021, 2.8% in 2021-22, then falls to 2.5%, 2.4% and 2.2% in the following years
  • Debt as a share of GDP is forecast to fall from 79.5% this year to 75.2% in 2024-25

Fuel duty

  • Fuel duty will remain frozen for another year. That will mean a saving of £1,200 since 2010, but at a cost of more than £100bn to the exchequer

Entrepreneurs’ relief

  • Entrepreneurs’ relief on capital gains tax, which costs the Treasury £2.6bn, will be scaled back from a £10m lifetime allowance to £1m

Tax

  • Corporation Tax cut will be cancelled, retaining the current 19% rate in April 2020
  • The increase in the National Insurance contributions (NICs) thresholds for employees and the self-employed, saving the typical employee around £104 and a typical self-employed person around £78 in 2020-21
  • The government will introduce a 2% Stamp Duty Land Tax (SDLT) surcharge on non-UK residents purchasing residential property in England and Northern Ireland from 1 April 2021

Wages and pensions

  • Minimum wage for over-25s will rise by 51p to £8.72 an hour from April. It will also rise to £8.20 (age 21 to 24), £6.45 (18 to 20), £4.55 (under 18) and £4.15 (apprentice)
  • National Living Wage will reach two-thirds of median earnings by 2024 – forecasting a wage for over-25s of £10.50 an hour

Environment

  • The government will increase taxes on pollution and raise funding for green transport solutions by £1bn
  • From April 2022, the government will charge £200 per tonne on packaging with less than 30% recycled content
  • 30,000 hectares of trees will be planted, and 35,000 hectares of peatland restored

Housing

  • Almost £1.1bn of allocations from the housing infrastructure fund will be made to build almost 70,000 homes in high-demand areas
  • £12.2bn in total 2020/21 grant funding for affordable homes programme, some of which was already announced

NHS

  • The government will increase NHS funding by £6bn during this parliament.
  • The NHS surcharge for people from overseas will increase to £624

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