Spring Budget 2020 reactions

The new Chancellor of the Exchequer, Rishi Sunak announced the latest UK Budget on Wednesday 11 March.

We have put together the reactions from the team at MHA Carpenter Box on the Budget, and its impact on different sectors and services in the UK.

Reactions from the team

Construction and Real Estate

The 2020 Budget should be well received by the construction sector. The government has sent out a clear message that it is willing to borrow more at low interest rates and invest significant amounts on capital projects, including infrastructure to connect the North and South, and flood defences. We will have to wait for details as the publishing of the National Infrastructure Strategy has now been delayed to the spring.

Robert Dowling, Head of Construction and Real Estate

Manufacturing and Engineering

A plastic packaging tax is to come into force from 2022. Manufacturers and importers whose products have less than 30% recyclable materials will be charged £200 per tonne and a consultation has been launched at how to best implement such a scheme.

Tony Summers, Head of Manufacturing and Engineering

Entrepreneurs’ Relief (ER)

Entrepreneurs’ Relief (ER) reduced from £10m to £1m effective immediately. However, the Substantial Shareholding Exemption (SSE) relief (which is a 0% tax rate on the sale of shares by holding companies) appears to be unchanged. Therefore I foresee greater use of holding companies as a measure to limit the tax paid on the sale of more valuable businesses.

David Crowter, Tax Partner

Independent Professionals

IR35 was not specifically mentioned in the Budget speech but it is mentioned in the notes. The government has recently concluded a review of the reform and is making a number of changes to support its smooth and successful implementation. The reform will be legislated in the Finance Bill 2020 and implemented on 6 April 2020, as previously announced.

Jeff Huggins, Head of Independent Professionals

Retail

Any retail outlet with a rateable value below £51,000 will pay no Business Rates over the coming year. Any retail outlet currently eligible for small business rates relief will receive a £3,000 cash grant per business, as they will not benefit from the rate reduction.

Mark McDowell, Head of Retail

Motor Retail

With longer term benefit-in-kind rates confirmed, fuel duty frozen, extension of plug-in grants, removal of excise duty on electric vehicles, extension of 100% first year allowances, and further investment into electric vehicles (EV) research and the EV charging infrastructure, corporates should have the confidence to be able to commit to investments in low emission fleets.

Chris Reeves, Head of Motor Retail

Healthcare

The Budget announced £6bn funding for the NHS across the life of this Parliament to help deliver the manifesto promises of 50,000 ‘new’ nurses and 40 ‘new’ hospitals. The Chancellor promised to give the NHS the support it required during the Coronavirus outbreak to pay for returning staff and vaccines when eventually ready.

Jeff Huggins, Head of Healthcare

Private Client

Within the finer detail, there are changes to top-slicing relief for life insurance policy gains made after 11 March 2020. This measure allows the personal allowance to be re-instated where gains push taxpayers’ income over £100,000.

Karen Thomas, Head of Private Client Services

Reading Tax

As technology changes, sometimes tax rules lag behind. Hard copy books and other publications are subject to VAT at 0%, whereas electronic versions are subject to 20% VAT. From 1 December 2020, the government is levelling the playing field, with e-publications becoming subject to VAT at 0%. A positive result for those that typically buy e-publications over their paper counterparts.

Dan Hobbs, Tax Partner

Agriculture and Rural Business

Some great news for the alcohol sector, with duties on wine, spirits, beer and cider being frozen. You may have also heard the words ‘red diesel scrapped’. However, no need to panic as the agricultural sector has been explicitly excluded from this, allowing those in the sector able to retain the current red diesel tax relief.

John Billings, Head of Agriculture and Rural Business

Sanitary Tax

The government is reducing VAT on women’s sanitary products to 0% with effect from 1 January 2021. This has been a hot-topic for some time, however the government had its hands tied by EU law. When our transitional arrangement with the EU ends on 31 December 2020, the government will have more power to change VAT rates, with women’s sanitary products being first on the list.

Dan Hobbs, Tax Partner

If you have any queries about how any of the above may impact you or your business please get in touch with a member of our Tax Team on 01903 234094.

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