What the budget means for business

Following the Budget, many will be asking what the Chancellor’s announcements means for Welsh businesses? Setting aside plans to tackle coronavirus, it looks thin on the ground.

In addition to confirming some manifesto promises, there were some new elements of the Budget that will be applicable here in Wales.

From April 2019, Welsh Government has the right to vary the rates of income tax payable by Welsh taxpayers. The UK government has reduced each of the three rates of income tax paid by Welsh taxpayers by 10 pence. Welsh Government set the rate of income tax at 10 pence which has been added to the reduced rates.

This means the tax payable by Welsh taxpayers continues to be the same as that payable by English and Northern Irish taxpayers and Welsh Government has confirmed that the income tax rate will remain at 10 pence for 2020/21.

We also learned that the threshold for National Insurance has also been raised to £9,500. A significant minimum wage rate increase will also take effect from 1 April 2020. The National Living Wage, which is the rate for workers aged over 25 years, increases by 6.2 per cent. The government states this equates to an annual pay rise of up to £930 for a full-time worker.

It was confirmed that corporation tax would remain at 19 per cent as promised in the manifesto. While this is still the lowest rate in the G20, one could wonder if we’ve missed an opportunity to attract increased inward investment by dropping to 17 per cent.

It was reassuring to see that entrepreneurs’ relief has not been entirely lost. Yes, the threshold for the 10 per cent tax rate has been dropped to sales over £10m to £1m. This relief has been heavily criticised in the past, so a reduction today is better than scrapping it all together.

It was also interesting to note that, despite not having much of a mention when he presented the budget, the Chancellor has raised threshold for pensions tax relief from £100,000 to £200,000. At face value you can look at this as just a benefit for high earners, but could it in fact have been created specifically with doctors in mind?

In his speech he declared “we are at the beginning of a new era in this country. We have the freedom and the resources to decide our own future” and we actually did see a change that steps away from EU mandated policy to UK define rules, but it wasn’t necessarily the one we might have expected. Mr Sunak declared the end of the hated ‘Tampon Tax’ and the abolition of VAT on digital publications. Both taxes were nonsensical, but their end signifies more than a popular common-sense decision.

Of course, the main topic of this year’s Budget was undoubtably the developing Coronavirus situation. Ahead of the Chancellor’s speech, the Prime Minister already announced that the COVID-19 Bill will temporarily allow Statutory Sick Pay (SSP) to be paid from the first day of sickness absence, rather than the fourth day, for people who have been diagnosed or have to self-isolate in accordance with government guidelines.

The also sets out a further package to widen the scope of SSP and make it more accessible. The government will temporarily extend SSP to cover those who are unable to work because they have been advised to self-isolate, people caring for those within the same household who display symptoms and have been told to self-isolate.

It has also been recognised that self-employed people and employees earning below the National Insurance Lower Earnings Limit are not entitled to SSP. As a result, the Government and will now offer financial support to these individuals through a new Employment and Support Allowance and Universal Credit.

Robin Hall, managing director, Kymin, Newport

The Budget, the first by the new Chancellor of the Exchequer, Rishi Sunack, was partly an infrastructure budget and partly the coronavirus budget.

Writing this over the weekend you could easily forget that there had even been a budget and earlier that morning a decrease in interest rates and the fast-moving scale of the coronavirus threat. Two announcements of note from a financial planning point of view were, firstly that the Junior ISA allowance will rise from £4,368 to £9,000, the same limit will also apply to Child Trust Funds.

Secondly, there is an increase in the pensions annual allowance taper thresholds of £90,000. This means that the threshold income for higher earners, after which their annual allowance is reduced, will be increased to £200,000. The annual allowance will only begin to taper down for individuals who have an “adjusted income” above £240,000 and those with an income of £312,000 or more will now have an annual tapered annual allowance of £4,000.

Gary Parker, Parker and Co Accountants, Newport

It was big borrowing, big spending, a big deal perhaps but I’m not sure if it will be big enough if we go into lock down as a result of the coronavirus.

Also where did Brexit and the trade agreements go, there was no mention of these at all.

Clearly the economic effects of the coronavirus have taken priority and the Westminster government seems to be attempting to avoid the short term issues becoming long term.

I think this would have been something of a giveaway budget anyway as it’s their first and I’m so pleased that the Osborne way has ended.

The various measures of support for small business will help an awful lot and are very positive but it remains to be seen if it will be enough. Many businesses have been left out of reliefs such as children’s nurseries etc.

The cancelled reduction in Corporation Tax and reduction in the lifetime allowance for Entrepreneur relief are disappointing but we did expect changes for the capital gains tax regime.

I have a feeling that the importance of the decision of Cobra meetings in connection with measures to delay the coronavirus will outweigh announcements made in the budget speech - we need to wait and see.