Budget 2020 – COVID-19 funding
It was a mix of short term fix and long term ambition in the Budget 2020 as Chancellor Rishi Sunak outlined a £30bn range of measures to provide a longer term boost to the economy and short term assistance to get the country through the coronavirus in the UK.
The coronavirus announcements topped the bill, with a temporary Interruption Loans Scheme being proposed. This would see banks offering loans of up to £1.2m to support SMEs and the HMRC scaling up the Time to Pay service.
In addition, businesses with fewer than 250 members of staff will be refunded for sick pay payments for two weeks where the SSP relates to Coronavirus. The Government will also pay statutory sick pay for workers who self-isolate, even if they have no symptoms, for firms with up to 250 employees.
Of the £30bn in extra spending, £12bn will be specifically targeted at coronavirus measures, including at least £5bn for the NHS in England and £7bn for business and workers across the UK.
There were a range of measures which will assist growth, such as an increase in the Research & Development Expenditure Credit, an increase in the Structures and Buildings Allowance and a commitment to increasing the UK’s investment in R&D to 2.4% of GDP.
There was also a welcome adjustment to the point at which the ‘Pensions taper’ starts to impact a higher earner’s ability to make pension contributions. This will make it much less likely that it becomes unsustainable for higher paid members of the NHS to remain in employment or do overtime, which was becoming an unforeseen consequence of the existing rules.
It wasn’t all good news however, with a u-turn on Corporation Tax where the rate will remain at 19%. And the well publicised amendment to Entrepreneurs’ Relief with a 90% reduction in the benefit will also disadvantage business founders across the UK.
Overall we would view the Budget as a measured and balanced response in difficult circumstances.