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Markel Tax

11 Mar 2020

Budget 2020: Synopsis

Budget 2020, delivered on 11 March 2020, felt like it had the potential to be something exciting and different from those of recent years, for a number of reasons:
  • Chancellor Rishi Sunak had only been in post for less than a month and would no doubt want to make his mark
  • The first Budget in the UK for a few  years with a Government with a majority electoral mandate
  • The first Budget in over 50 years when the UK was not part of the EU
Over the past few weeks, many of you had told us that you thought we might see some brave, radical changes. 

From the outset, it appeared that we might be in line for some of that.  The new Chancellor certainly appeared to come across well compared to some of his predecessors – articulate and brimming with enthusiasm.  In particular he seemed to have the full attention of the House, which has previously been (rightly) criticized for poor behaviour, including jeering and attempted interruptions, despite the best efforts of the Deputy Speaker.  It was refreshing not to see those behaviours this year.
 
Understandably, it was also a very different Budget from both previous years and our expectations in the buildup, as a result of the COVID-19 position.  It certainly felt right that stability and security were referenced very early on, together with detailed measures which are very specific to the current COVID-19 situation.  However, the Chancellor also made sure he pointed out that this Budget intended to reflect measures which would result in both ‘stability today’ and ‘prosperity tomorrow’.

One thing that had changed, made easier by the current Government having a clear mandate, were the focused, unwatered down policies and the repeated message that this is a Government determined to ‘get it done’.  If nothing else, that sense of determination and clarity of purpose may well ignite the passion, energy and confidence amongst UK businesses and individuals that is so desperately needed right now.

With the ink scarcely dry on the Brexit deal and global trade negotiations ongoing, there was understandably little in relation to attracting inward investment into the UK by way of tax breaks.  However, we should expect more on this over the coming months as that situation develops.

It was a Budget that felt like it had lots of giveaways, particularly for small businesses.  However, taking away any changes that are specific to COVID-19, many of the other positive aspects did not require significant, immediate government spending  or benefits received by small businesses. 

Whilst welcome, measures such as improvements in the Research and Development Expenditure Credit rate will mainly affect larger businesses.  Additionally, many small businesses will be adversely affected by the abandonment of the reduction of the corporation tax rate from 19% to 17% - something that they may well have budgeted for when planning their year ahead.

With so many changes in different areas, there are a lot of factors for businesses to take into account when deciding if they are, financially at least, a winner or a loser as a result of this year’s Budget.  Maybe it wasn’t so different to Budgets of previous years after all?
 
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11 Mar 2020

Budget 2020: First thoughts