12 March 2020 - It was perhaps inevitable that this Budget would be taken over by events out of its control. The Coronavirus is dominating headlines the world over and, naturally, the Government recognised that now was not the right time to be tinkering with taxation concerns and pension legislation.
Therefore, most of the comment from Rishi Sunak concerned a commitment to ensure that the NHS had sufficient resources to cope with the escalation of the epidemic, along with some element of protection for both firms and workers who were directly affected by it.
Therefore, a lot of the spending headlines were around the broader long term ‘Infrastructure Revolution’ with various announcements around spending on road, rail, broadband and housing, which are estimated to cost around £600bn by the middle of 2025.
All of this meant that little was announced concerning savers and investors.
One key announcement concerned those affected by the Tapered Annual Allowance for pension contributions. Broadly, the income levels at which people are affected was increased by £90,000, which means it is only an issue if your income is in excess of £240,000 (rather than £150,000). Interestingly, this was initially brought in to place to stop those paying 45% income tax from benefiting fully from 45% tax relief.
This change goes against that and you do wonder where we go next with this.
We may not have long to wait, as the expectation is that we will revert to an Autumn Budget later in the year, when the Government will have a better understanding of the effect of the epidemic. This will also give the new Chancellor a little more time to get his feet under the table.
Full details of what Personal Finance changes were made (or not as the case may be) are as follows:
Personal Allowance remains unchanged at £12,500.
The threshold above which higher earners start paying 40% tax is also unchanged at £50,000.
Both are due to increase in line with Consumer Price Index (CPI) in future years.
The ISA annual subscription limit for 2020/21 will remain unchanged at £20,000.
The capital gains tax allowance has increased to £12,300.
Standard lifetime allowance
The standard lifetime allowance for pensions will increase in line with the rise in the consumer prices index (CPI) for 2020/21 to £1,073,100.
There are no changes to pension annual allowances. The standard annual allowances remains at £40,000.
However, the high income annual allowances taper rules have been changed. Adjusted Income (the level at which income must be earned before the tapering starts) increases by £90,000 to £240,000, with the Threshold income also increasing to £200,000.
Inheritance tax rates and exemptions
The IHT Nil Rate Band will remain frozen at £325,000 until 2021/2022 as previously announced.
Residence Nil Rate Band (RNRB)
The Residence Nil Rate Band will rise to £175,000 from April 2020 as previously announced.
Entrepreneur Relief has been amended with the Lifetime limit reducing from £10m to £1m.
Corporation Tax remains unchanged at 19%.
National Insurance Contribution Tax threshold increases from £8,632 to £9,500.