Spring Budget 2020 – what should be included?
Chancellor Rishi Sunak has had a challenging few weeks to run up to his first Budget. When he stands up on Wednesday to present his first Spring Budget, he’ll only have been in office a few weeks. Added to that, he’s under pressure to deliver from various groups.
What are business groups calling for?
The Federation of Small Businesses wants Sunak to amend Entrepreneurs Relief rather than remove it entirely. Boris Johnson hinted that it could be scrapped in a recent comment when he said ‘It seems that the changes to entrepreneurs’ relief could be more drastic and more imminent.’
Entrepreneurs Relief was mentioned during the election last year. Since then there has been a lot of speculation around its future.
The FSB has suggested keeping entrepreneurs relief for the first £1 million of any business sale and ‘scaling it back at the top end’.
Mike Cherry, chairman at the FSB, said ‘Scrapping entrepreneurs relief would destroy the retirements of thousands of business owners and make a bad situation worse. The solution is obvious: keep the relief for the first £1m of a business sale and scale it back at the top end. Doing so would save the Treasury more than £1 billion and maintain a vital incentive which encourages entrepreneurs to startup, hire and invest.’
Give Businesses a Boost
The British Chambers of Commerce (BCC) are urging Sunak to ‘stop endless rises in upfront costs that stranger businesses.’ They want him to include measures that help businesses to thrive once the Brexit transition period comes to an end on the 31st December 2020.
The BCC is worried about increasing costs to move goods across borders, recruit staff and meet their tax obligations.
They also want the Chancellor to avoid implementing new regulations in the Budget.
Adam Marshall, director-general at the BCC, said: ‘The Chancellor has a huge opportunity to go ‘all in’ and take big steps to improve conditions for UK business and enterprise. An opportunity to stop the endless rises in upfront costs, to back innovators and entrepreneurs, and to send a signal of support to British business through this period of political change.’
Provide support to cope with impact of Coronavirus
Amidst all of the media coverage of COVID-19, widely reported panic-buying and of self isolation, small businesses are already feeling the impact of the virus.
Supermarkets have empty shelves, orders are down, foot fall is down further than ever on our high streets and once full pipelines are suddenly empty. Coupled to that, stock markets around the world have plunged this morning.
Interviewed yesterday, Sunak pledged the NHS will receive ‘whatever resources it needs’ to cope. He also said that he’s considering extra financial help for businesses who lose out from measures to deal with the virus.
He said the impact of the virus on business ‘could be significant, but for a temporary period of time’. Given the significant impact we are already seeing on some clients, this could be a subject to watch on Wednesday.
Our advice at the moment would be to keep careful records of the impact to your business of Coronavirus.
- Have you had to change plans?
- Have you lost business?
- Have you had staff who have had to self-isolate?
At this stage we have no idea what the progression of measures will be. Experience suggests that any opportunities to claim will only be available to those with records to support their figures.
The Institute for Fiscal Studies (IFS) has declared that taxes must rise. The Chancellor os under pressure to increase spending on education, the NHS and social care. He also has to meet predecessor Sajid Javid’s target to balance spending by 2022.
Whilst doing so, he must adhere to the Conservative manifesto not to raise Income tax, national insurance or VAT.
Without raising taxes, debt would have to rise, which would make it impossible to meet the fiscal target.
The IFA has suggested abolishing the freeze on fuel duty as one way to increase income for the Government. It also suggested the abolition of Entrepreneurs Relief and increased Council Tax on higher value properties could help.
As always, we will be monitoring the content of the Spring Budget very carefully. Our summary will come out to clients as quickly as possible, and we’ll have a summary on here as well. Be sure to check back for updates, or contact us if you have any specific questions from the headlines.