The long-awaited plan was somewhat overshadowed by the economic shock seemingly about to be caused by the coronavirus, which triggered the Bank of England to slash the base rate this morning (March 11). Measures to mitigate the downturn dominated the chancellor’s speech.
Borrowing forecasts for the next five years rose significantly, starting with an increase from 1.3 per cent of GDP to 2.1 per cent in the current tax year, partly due to the cash boost to tackle the crisis. The backdrop was a UK economy that this morning was revealed to have shown stagnant GDP growth of zero per cent over the past three quarters.
Both the short-term and the long-term, then, were in the chancellor's sights - and there were plenty of measures of relevance to advisers, too.
1 £30bn to help curb the virus
Mr Sunak announced a package of measures to provide a bridge for businesses to make sure the temporary coronavirus did not “become permanent”.
He pledged a £2bn cash injection for small businesses, promising to refund the cost of providing statutory sick pay to any business with under 250 employees impacted by the virus.
HMRC has been asked to "scale up" its Time to Pay service, allowing businesses and the self-employed to defer tax payments over an agreed period of time, and the Treasury will introduce a "temporary coronavirus business interruption" loan scheme, which will see banks offer loans of up to £1.2m to support small and medium sized businesses through the disruption. Sick leave rules were also relaxed.
2 Taper tweaking
With NHS staff in the spotlight now more than ever, the chancellor also unveiled plans to raise the point at which tapering of the annual allowance kicks in from £110,000 to £200,000 as of next month.
This move means anyone with income under £200,000 will not be affected by the controversial taper, which has seen doctors ditch overtime to avoid a hefty tax charge.
The chancellor said this will take 98 per cent of consultants and 96 per cent of GPs out of the taper altogether.
Others have accused the Treasury of “tinkering”, calling the Budget a “missed opportunity” to scrap the whole thing.
3 Taking back
But the government is taking back some money itself. Mr Sunak slashed entrepreneurs' relief, limiting the tax break available to those selling their business to £1m over a lifetime (down from £10m).
The Budget also announced extra funding to support HM Revenue & Customs crackdown on tax avoidance, which the chancellor said would create an additional £4.4bn in revenue over the next five years.
The Treasury is also set to probe the quality of tax advice, threatening to penalise financial advisers found to have promoted tax avoidance schemes. It will also launch a review into the VAT treatment of fund management fees as the first part of a wider look at the UK funds regime, though tax hikes here are unlikely.
4 Joy for Junior Isas
In simpler news, the government announced it would double the amount clients were allowed to invest in their children's Junior Isa to £9,000.
Adrian Lowcock, head of personal investing at Willis Owen, said it was a “truly eye-catching change”.
The change means parents could build a tax-free pot of more than £240,000 by the time their child reaches 18, assuming they put the maximum in each year and it grows by 4 per cent every year after charges.
5 No-shows
But not everything made it into Mr Sunak’s first red book, with no meaningful policy on social care, barely a mention of inheritance tax and no mention of the changes to the controversial IR35 rules.
The government skirted over social care, merely saying it was committed to long-term reform of the system - and that Matt Hancock, secretary of state for health and social care, has written to MPs to begin building cross-party consensus on reform.
Advisers had been hoping for a simplification of inheritance tax, which has not been announced, while contractors and businesses who were campaigning for the proposed changes to IR35 to be scrapped will also be left disappointed.
imogen.tew@ft.com
What do you think about the issues raised by this story? Email us on fa.letters@ft.com to let us know.
