In early January Chancellor announced a new Budget date: 11 March 2020.
This could be a significant Budget. Traditionally, the first Budget of a new Parliament is when the Chancellor delivers the medicine of tax increases and/or unpopular reforms. To borrow from Macbeth: ‘If it were done when ‘tis done, then ‘twere well it were done quickly’…that way the electorate has over four years to forget.
If you’re struggling to remember what happened in Budget 2019, you haven’t forgotten. Unusually, in 2019 there was no Budget. There was a Spring Statement in March 2019 from Philip Hammond, but the general election call forced his successor, Sajid Javid, to abandon the planned Autumn Budget set for 6 November. During the election campaign the Conservative party said that the Budget would be revealed in February, but this date shifted again in the new year when the Chancellor announced a date of 11 March.
We already know a good proportion of what the Chancellor will announce, as draft legislation was published eight months ago in anticipation of the cancelled Autumn 2019 Budget. The contents will almost certainly include controversial legislation to strengthen the operation of off-payroll working rules (IR35) in the private sector, possibly with some amendments following the government’s last minute review, as well as tighter rules on the capital gains tax treatment of main residences. Both are due to take- effect from 6 April 2020.
Ahead of the Budget, the government confirmed at the end of January a ‘tax cut’ mentioned in the Conservative party manifesto, of an increase in the starting point for national insurance contributions (NICs) from the current £8,632 to £9,500 a year – a maximum saving of £2 a week.
The Budget unknowns include what the Chancellor might do about pensions tax relief. He already faces a growing problem with the impact of the annual allowance on NHS senior staff, which has been fixed temporarily, but only until April. There are already calls for the Chancellor to overhaul the system, something he could do while simultaneously raising more revenue.
One consequence of the Budget date is that any year end tax planning – especially on the pension front – now potentially has a deadline date of 10 March.
Tax laws can change. The Financial Conduct Authority does not regulate tax advice. The value of your investment can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.
The Budget is now set for 11 March, with speculation around changes to pensions allowances, tax reliefs and more, including the controversial IR35 roll out.