Budget 2020 was dominated by measures aiming to protect individuals and businesses from the devastating effects of Coronavirus. Chancellor of the Exchequer, Rishi Sunak acknowledged that the virus posed a challenge and a threat of recession to our economy.
The budget gave the immediate priority to support the NHS and other public health services and set up £5bn emergency response fund.
For businesses with fewer than 250 employees, the government promised to refund in full 2 weeks of COVID-19 related sick pay per employee, and that is, even if they been advised to self-isolate and have not had symptoms.
Self-employed workers who are not eligible, will be able to claim contributory Employment Support Allowance from day one, and not after a week as now.
Additionally, to support businesses and individuals in the UK, on the 26th of March, in the unprecedented government package, Chancellor Rishi Sunak, announced cash grants to the value of 80% of their profits, up to £2,500 per month.
This generous support could benefit millions of self-employed in the United Kingdom.
The scheme will be open to those of trading profits less than £50,000 in 2018-2019 tax year or an average trading profit less than £50,000 in the tax years 2016-17, 2017-18 and 2018-19. To minimise fraud, and to qualify, the self-employed must have also submitted SA Tax Return for the year 2018-19. This way only the already self-employed and those who meet the above criteria, are included. To facilitate the above, the governments also extends the January deadline submission for late runners.
Income support scheme will cover three months to May and those eligible will receive the grants in a single payment. HMRC will contact all those who are eligible and will start the payments at the beginning of June.
Self -employed who pay themselves salary or dividends, will receive their salary from the Coronavirus job retention scheme (only if they run PAYE scheme).
Also, the government has set up a dedicated helpline to help businesses and individuals in distress over the loss of income due to COVID-19. Those with outstanding Tax liabilities will equally receive support with their tax affairs.
Many have been already benefiting from the measures announced by the Chancellor and lots will be able soon from other schemes, as they pan out. Those include the following:
protection against eviction from landlord
income tax and VAT payment deferrals
the abolishment of business rates for the firms in retail, leisure and hospitality
7 billion boost to Universal Credit
1 billion more support for renters and mortgage holidays, as well as “business interruption” loans of up to £1.2m.
The £500m hardship fund for councils in England in support of the most vulnerable in their areas.
In the area of Personal Taxation, there is an increase in the National Insurance Contributions tax threshold from £8,632 to £9,500. Following, about 500,000 employees earning over £9.500, will benefit on average £85 a week, or are not going to be have to pay tax altogether.
Economists predict the growth by 1.1% this year, down from 1.4% a year ago. This makes for the slowest economic growth since 2009, without even taking into account the impact of Coronavirus. At the same time, we can expect rebound to 1.8% in 2021-22, 1.5% in 2022-23, and 1.3% in 2023-24.
Inflation is forecast to 1.4% this year and it is to increase in 2021-22 to 1.8%.
Most of the public spending will run on additionally borrowed money in total to the amount of £96.6 billion. This year the government will borrow £14.6 bn more than previously forecast, equivalent to 2.1%of GDP.
Debt, as a percentage of GDP, is forecast to be lower at the end of the current Parliament than now.
Budget 2020 and support to millions affected by COVID-19 Your Tax Assistant
Budget 2020 and support to millions affected by COVID-19