When Chancellor Rishi Sunak gave his first Budget speech on Wednesday 11 March, many viewers were looking for reassurance that the Government would offer economic support for businesses and individuals during the coronavirus outbreak.
Earlier in the day, the Bank of England had already announced its decision to cut interest rates to 0.25% in an effort to lessen the impact on the economy, and Sunak proceeded to announce further emergency measures.
These included changes to statutory sick pay rules, funding for health services, and loans, grants and tax relief for businesses.
Other much-anticipated announcements were made, including a rumoured change to entrepreneurs’ relief.
This relief offers a lower capital gains tax rate of 10% for people who sell a business they’ve owned for at least two years, up to a lifetime limit of £10 million.
In the lead-up to the Budget, speculation had emerged that the relief would be scrapped, but rather than removing it altogether, the Chancellor reduced its lifetime limit to £1m.
Other significant announcements for businesses included an increase to the employment allowance from £3,000 to £4,000, and a temporary business rates holiday in 2020/21 for all retail, leisure and hospitality businesses with a rateable value under £51,000.
This will be followed by a “fundamental review” of the business rates system, to conclude with the next Budget in the autumn.
How does the Budget affect doctors and medical professionals?
Sunak emphasised that the NHS would get “whatever it needs” to cope with the impacts of coronavirus, and announced a £5 billion emergency response fund for the NHS and other public services.
The other headline measure for doctors was a fix to the tapered annual allowance for pensions, which has faced criticism for preventing medical professionals from taking on extra hours.
In 2019/20, the taper applies to people with adjusted income of more than £150,000, and threshold income of more than £110,000.
It reduces the amount of annual pensions allowance they get, by £1 for every £2 their adjusted income goes over the £150,000 threshold. The annual pensions allowance currently stands at £40,000, but can be reduced to a minimum of £10,000 by the taper.
From April 2020, both thresholds will be increased by £90,000, so that only those with an income of £200,000 or more may be affected.
The Chancellor said this would take 98% of consultants and 96% of GPs out of the taper altogether.
However, for those with higher incomes who are affected by the taper, the minimum annual allowance is being reduced to £4,000.
How does the Budget affect charities?
While emergency funding for public services, businesses and individuals was the main focus of the Budget, there were very few charity-specific announcements.
John Hemming, chairman of the Charity Tax Group, called the lack of charity announcements in the Budget “disappointing”, and said the Government “can do more to support charities, as a key supporter of wider society”.
However, he noted that the zero-rating of VAT on digital publications would benefit charities that use publications to inform the public about their work.
Additionally, it was announced that the 5% VAT rate on sanitary products, known as the “tampon tax”, would be abolished from 1 January 2021.
A spokesperson for the National Council for Voluntary Organisations called this “welcome news”, but said it raised questions about the future of the tampon tax fund, which used the VAT funds to provide grants to organisations working with disadvantaged women and girls.
The Chancellor also announced a £10m donation to the Armed Forces Covenant Fund Trust in 2020/21, to support charitable projects for veterans with mental health needs.
At JCS, we offer a personalised accountancy service for businesses of any size, as well as specialist advice for medical professionals and charities. We can help you to understand what this year’s Spring Budget means for you.
Find out more about our services, or talk to us for more information.