Chancellor of the Exchequer Rishi Sunak has presented his first Budget in the House of Commons, laying out the government’s plans for tax and expenditure for the year.
Along with an additional £30 billion worth of spending, Sunak has scrapped business rates for firms across various sectors in England, as well as increasing sick pay and providing a boost to NHS funding to help steer the UK through the coronavirus outbreak.
Sunak said in his Budget speech in the Commons: “We are doing everything we can to keep this country and our people healthy and financially secure.
“We will get through this together”.
Economic growth of 1.1 per cent has been predicted for the year, downgraded from 1.4 per cent last year. Inflation for the year is forecast to be 1.4 per cent.
The Bank of England has also announced an emergency interest rate cut, reducing rates to 0.25 per cent from 0.75 per cent.
Government borrowing this year has also increased compared to previous estimations, going up to £14.6 billion, the equivalent of 2.1 per cent of GDP.
The Budget sets aside £5 billion in an emergency response fund to bolster the NHS and public services as the UK bids to control the coronavirus’ spread, with all individuals advised to self-isolate now entitled to statutory sick pay.
Self-employed workers who are ineligible for sick pay will have the right to claim contributory Employment Support Allowance, accessible from day one, while any firms operating with less than 250 staff will be entitled to refunds for sick pay payments for two weeks.
Duty on fuel, spirits, beer, cider and wine has been frozen, while tax on tobacco will continue to rise by two per cent above the rate of retail price inflation. The five per cent VAT rate on sanitary products for women has been removed.
Business rates will be abolished for any operators in the retail, leisure and hospitality industries with a rateable value below £51,000, with discounts for pubs rising from £1,000 to £5,000 in 2020. The High Street business rates system is also set to be reviewed later in the year.
Sunak did not make any new announcements on income tax rates, but the threshold for National Insurance Contributions will go up to £9,500 from £8,632, making an estimated 500,000 people exempt.
The chancellor has persisted with tax relief for entrepreneurs but scaled back the lifetime allowance from £10 million to £1 million, and also done away with a planned corporation tax cut. The move is estimated to save £6 billion over the next five years.
Taxes on the pensions of higher earners such as doctors are also set to be recalculated.
£5 billion will be put towards the rollout of gigabit-ready broadband into the most isolated areas of the country, the provision of which was one of prime minister Boris Johnson's ambitious manifesto promises.
In line with the government’s environmental pledges, April 2022 will see a plastic packaging tax come into force, while a new £640 million climate fund for natural habitats will be provided.
Following the recent spells of adverse weather, spending on flood defences will double to £5.2 billion over the next five years.
The Office for Budget Responsibility that the additional spending would be the biggest Budget giveaway since that announced in the year 1992.
