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Loosening the purse strings amidst the backdrop of the global COVID-19 outbreakThe first Budget since the UK’s departure from the European Union

Spring Newsletter 2020

A Budget that delivers on changeAmidst the Coronavirus outbreak everything is being done to keep the country safe, healthy and

financially secure.

Delivering on the election promise where people voted for change. A Budget that delivers onchange, that provides security for today and a plan for tomorrow.

The Budget talked of doingeverything it could to keep thecountry and people healthy andfinancially secure, but alsodelivering on the Government’spromise to deliver change.

Budget OverviewBuilding on the Tory manifestopledge to loosen the pursestrings, and protect people’shealth and support public servicesamidst the COVID-19 globaloutbreak.

Responding to COVID-19Public safety was made theGovernment’s first priority in itsresponse to COVID-19 and itannounced it would take firmaction, consistent with the bestscientific evidence.

Personal TaxationThe Personal Tax Allowance isremaining at £12,500 but the limitfor Class 1 National InsuranceContributions will rise from £8,632to £9,500 for 2020/21.

Public Services andInfrastructureThe Government said it isdetermined to fix the brokenhousing market and restore thedream of home ownership for anew generation.

Supporting business, those inneed and young peopleA review of business rates is tobe launched. Changes areplanned for Universal Credit.Funding increases are plannedfor schools.

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Any information in this brochure does not constituteadvice and should not be acted upon without taking

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The Budget was the first since the UK’s departure from the European Union (EU) but wasdominated by measures to support British businesses and individuals following the COVID-19outbreak.

Building on the Tory manifesto pledge to loosen the purse strings, Chancellor Rishi Sunak startedhis business-friendly Budget by promising UK businesses £12 billion, which along with £18 billion ofadditional Government spending, provides support to the economy of £30 billion to lessen theimpact of the COVID-19 virus. The Government announced it was well prepared to support publicservices, individuals and businesses that may be affected by COVID-19.

The Budget aims to carefully manage public finances in order to support the economy in the shortterm, whilst investing in the future. Plans to invest in the roads, railways and digital networks inorder to underpin growth, as well as the world-class hospitals, schools, colleges and police forcesover the coming decade were declared. Investment in research and development (R&D) as well ascutting-edge technologies were also announced.

A tax break from the Government regarding national insurance was promised in the Conservativemanifesto. The current threshold sees employees and the self-employed paying contributions oncethey earn £166 a week, equivalent to an annual salary of £8,632 a year. From April, you will nowstart paying when earning £9,500, saving a typical employee around £104 and a typical self-employed person around £78 in 2020-21 and take around 1.1 million people out of paying Class 1and Class 4 National Insurance Contributions entirely.

The Budget also took steps to decarbonise the economy and protect the UK’s natural habitats.

A Budget that loosens the purse strings

Budget Highlights

£12 billion to lessen the impact of the COVID-19 virusInvestment in roads, railways and digital networks

World class hospitals, schools, colleges, police forces over the next decadeInvestment in research and development and cutting edge technologies

Tax break for millions

TPersonal Taxation

The Personal Tax Allowance is remainingat £12,500 but the limit for Class 1 NationalInsurance Contributions will rise from£8,632 to £9,500 for 2020/21

Income taxThe personal allowance will remain at £12,500and the higher rate threshold will stay at£50,000 for 2020/21, as announced in the2018 Budget. In Scotland, the higher ratethreshold for non-savings, non-dividendincome will also be unchanged at £43,430.

Flat rate deduction for homeworkingFrom April 2020 the maximum flat rate incometax deduction available to employees to coveradditional household expenses will increasefrom £4 per week to £6 per week, where theywork at home under homeworkingarrangements.

Individual savings account (ISA)subscription limitsThe ISA annual subscription limit for 2020/21will remain at £20,000. However, the annualsubscription limit for junior ISAs (JISAs) andchild trust funds (CTFs) will more than double,from £4,368 to £9,000.

Employment allowanceThe employment allowance will be increasedfrom £3,000 to £4,000 a year for 2020/21, asannounced previously. This measure willbenefit around 510,000 businesses, includingaround 65,000 businesses which will be takenout of paying National Insurance Contributionsentirely.

National insurance contributions (NICs)The primary threshold (employeecontributions) for Class 1 NICs and the lowerprofits limit for Class 4 NICs will rise to £9,500for 2020/21, as announced in January 2020.However, the secondary threshold (employercontributions) will not move in parallel, butinstead it will increase to £8,788.

Tapered annual allowance for pensionsThe two tapered annual allowance thresholdsfor pensions will each be raised by £90,000from 2020/21. The ‘threshold income’ figure

will therefore be £200,000 and the ‘adjustedincome’ figure will be £240,000. This will helpmany people, such as medical consultants,who have faced large tax bills on extra pay.While the rate of taper is unchanged, theminimum annual allowance for the highestearners from April 2020 will be reduced from£10,000 to £4,000 — at an ‘adjusted income’of £300,000 or more.

Lifetime allowance for pensionsThe lifetime allowance for pension savings willincrease to £1,073,100 for 2020/21, in linewith inflation.

Tax guidance for self-employed peopleTo make it easier for self-employed individualsto navigate the tax system, the Governmentwill this summer launch new interactive onlineguidance for taxpayers with non-PAYEincome.

Infrastructure and Public Services

The Government is investing recordamounts in Britain’s roads, railways,broadband, housing and research.

Over the next five years the public sector willinvest more than half a trillion pounds(£640bn) and by the end of the Parliament netinvestment will be triple the average over thelast forty years in real terms.£27 billion between now and 2025 to improvevital transport routes. New road projectsinclude:· A66 in the North East· Lower Thames Crossing in the South East· A303 Stonehenge in South West· £2.5 billion will be spent over the next 5

years, with £1.5 billion in 2020-21 onpotholes and resurfacing roads.

· Eight elected Mayors will get long-termsettlements for local transport worth £4.2billion

· £5 billion to help people access gigabit-capable broadband in the most difficult toreach areas of the UK.

· Over £500 million to extend 4G mobilecoverage to 95% of the UK

· £12.2 billion to build more affordablehomes.

· Government research and developmentspending will rise to £22 billion per year by2024-25 taking it to 0.8% of GDP, thelargest and fastest increase in R&Dinvestment on record, amongst the top25% of OECD nations.

The Government will increase funding forits number one spending priority: the NHS.

Compared to 2018-19, NHS England willreceive a cash increase of £34 billion a yearby 2024.

The Budget made a provision of newadditional funding to create more GP surgeryappointments per year as well as ensuringthere are more nurses, and funding widercommitments on hospital car parking andsupport for people with learning disabilitiesand autism. The Budget also sets out action to

ensure that pensions tax rules do not deterdoctors from taking on additional shifts.

The Budget commitment of more than £6billion of new funding to support the NHSincludes:

· creating 50 million more GP surgeryappointments

· ensure there are 50,000 more nurses

· wider funding commitments on hospitalcar parking and support for people withlearning disabilities and autism

· The Budget will invest over £100 million in2020-21 to make progress on the 40 newhospital projects announced as part of theHealth Infrastructure Plan and providing£683 million additional funding to theDepartment of Health and Social Care toprotect the level of NHS operational capitalinvestment.

Support for many!Supporting businessA fundamental review of business rates will belaunched which will be reported on in theautumn.A new pubs discount will also be introduced totake £5,000 off the business rates bills ofeligible pubs with a rateable value below£100,000.The Employment Allowance for EmployerNational Insurance Contributions is increasingfrom £3,000 to £4,000. Over half a millionbusinesses will benefit from this reduction totheir costs of employment, with an averagegain of £850 per year.The Structures and Buildings Allowance forCorporation Tax will be increased from 2% to3% from April 2020 and will provide over £1billion in additional relief for businesses by theend of 2024-25.An extension of the British Business Bank’sStart-UP loans Programme to the end of2020-21 supporting up to 10,000 furtherentrepreneurs to start a new business.

Supporting schools and young peopleThe minimum per pupil amount will increaseto £3,750 for primary schools and £5,000 forsecondary schools in 2020-21

On average, schools will see an increase ofover 4% in funding per pupil compared to2019-20 budgets

Supporting further education colleges£1.5 billion will be invested to upgrade FurtherEducation colleges· £120 million for up to eight new Institutes

of Technology and £7 million for a total ofeleven maths schools, so students canaccess high quality STEM provisioneverywhere

· £95 million for providers to buy up-to-datefacilities and equipment to support deliveryof T Levels, our new technical educationqualification

· £90 million per annum to fund artsactivities for all secondary school pupilsand £29 million to boost PE andcompetitive sport in primary schools.

Supporting those in needChanges to Universal Credit, includingallowing claimants to retain more of theirbenefits each month by increasing therepayment period for advances and reducingthe level of debt that can be collected fromawardsTo tackle rough sleeping, a spend of £237million for accommodation for up to 6,000rough sleepers, plus £144 million forassociated support services and £262 millionfor substance misuse treatment serviceswhich will help more than 11,000 people ayear.There will be a new pay and leave entitlementfor parents of babies who spend extendedtime in neonatal careA further £9.5 billion grant funding, making£12.2 billion from 2021-22, bringing in afurther £38 billion in public and privateinvestment in this new 5 year programme.An £8 million fund for football facilities forthose in deprived areasHospital car parking fees for selected groupsincluding NHS staff on night shift, disabledand terminally ill patients.£200 million will be allocated to communities

Other MeasuresDigital connectivityThe government is committing £5 billion to support the rollout of gigabit-capable broadband in themost difficult to reach 20% of the country, so that all areas are able to benefit.

Plastic packaging taxA new tax will be introduced from April 2022 to incentivise the use of recycled plastic in packaging.The rate will be £200 per tonne of plastic packaging that contains less than 30% recycled plastic. Itwill apply to the production and importation of plastic packaging.

Red dieselThe entitlement to use red diesel and rebated biofuels will be removed from April 2022 except foragriculture (including horticulture, pisciculture and forestry), rail and non-commercial heating.

Women’s sanitary productsThe zero rate of VAT will be charged on tampons and other women’s sanitary products from 1January 2021

Greener economyThe UK has already cut carbon emissions by more than any other G7 country and in 2019 was thefirst major economy to legislate for a target of net zero greenhouse gas emissions by 2050.

Fuel dutyFreeze of fuel duty for the tenth year in a row, saving the average car driver a cumulative £1,200compared to what they would have paid under the pre-2010 fuel duty escalator.

Zero VAT for e-publicationsThe government will introduce legislation to apply a zero rate of VAT to e-publications from 1December 2020

ApprenticeshipsThe government will ensure that sufficient funding is made available in 2020-21 to support anincrease in the number of new high-quality apprenticeships in small and medium-sizedbusinesses.

Alcohol duty ratesDuty rates on beer, spirits, wine and cider will be frozen.

National Living WageThe National Living Wage will increase from £8.21 to £8.72

Merlin Financial Services Ltd

Spring Newsletter 2020

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