Budget 2020: How was it for you?

AccountingWEB readers seemed in good spirits the morning of the 2020 Budget as the public waited for the Chancellor of the Exchequer’s speech to begin. 

Users like Justin Bryant on Any Answers were happy with the interest rate cut announced at 7am: “I am in a good mood today as my mortgage is variable with the BoE Base Rate.

“Also, the British public like nothing better than to gear up on the tax-free equity in their home and spend the cash on whatever, so it's bound to have a positive impact on consumer spending etc.”

However, for others, like DJKL, this was more of a symbolic move than having any real future effect.

“We are getting it done”

Although Rishi Sunak’s Budget speech was more lively and persuasive than many of his predecessors, the incessantly repeated rhetoric of “we are getting it done” was largely met with rolling eyes from our live panel audience.

In the Live Budget Panel, PracticeWeb’s Ray Newman viewed “the Budget of a government that gets things done” as a continuation of Brexit rhetoric, and “the influence of Dominic Cummings and his remarkable message discipline”.

And for others, it was laughable:

I’ve just won the office Budget Buzzword Bingo...

“Getting it done”

Hope my prize is some toilet roll. #Budget2020

— Guy Woodward (@guy1logic) March 11, 2020

To IR35, or not to IR35

Many people were hoping for clarification on the IR35 off-payroll rules for the private sector but were disappointed to find the speech only confirmed the changes would be going ahead as planned:

Full steam into oblivion.

— MoltoVinos (@MoltoVinos) March 11, 2020

For FreeAgent’s CEO Ed Molyneux, the lack of changes was disappointing: “The Chancellor had a great chance to provide the UK’s contracting industry with some much-needed relief by postponing, or even stopping, these reforms – but he has clearly decided to prioritise announcements that will gain favourable column inches rather than having a long-lasting benefit on this vitally important part of the economy.”

Statutory Sick Pay (SSP) for the COVID-19 infected

Burton Sweet partner Nigel Harris viewed the changes to SSP as political window dressing. Making it more accessible and extending it to all those affected by COVID-19 isolation measures would place an additional strain on employers rather than the government:

Small business grant 

A passing comment in the Chancellor's speech announcing a £3,000 cash grant for small businesses generated the most interest among AccountingWEB members, including many self-employed accountants who might qualify. But there were frustrations about the lack of more details on the policy. 

According to RedFive, “With local authority administrating it though I won’t hold my breath to claim myself or point my clients towards the process of doing so.”

Increase to tapered thresholds

Responding to the pensions tax system preventing doctors from taking on more hours, Sunak proposed to increase both taper thresholds by £90,000 and reduce the minimum annual allowance to £4,000 for incomes above £300,000. This was met with “vigorous nodding... from the accountants in the room here at PracticeWeb towers”, reported editor Ray Newman.

Entrepreneurs’ relief

A wide concern over the likelihood of entrepreneurs’ relief being scrapped entirely was relieved by a “sensible reform” in reducing the lifetime limit from £10m to £1m.

However, others did not see the plans laid out in Budget as realistic:

Helluva lot of extra spending in this #budget, and so far the only tax rise has been a reform of entrepreneurs relief. Awaiting the part of the speech where Sunak announces discovery of a magic money planet.

— Natalie Hunter (@NatHunter_1) March 11, 2020

Technology Budget news

Technology, was, of course, not to be left out in Budget plans. There was barely a peep from the Chancellor in his speech about the controversial digital services tax, but paragraph 2.205 of the Budget red book confirmed, the government will introduce a new 2% tax on multinational companies turning over more than £500m that earn more than £25m a year from social media, search engines and online marketplaces serving the UK.

This measure will not be popular with Google, Facebook and Amazon and several other tech giants, who may be expected to fork out more than £1.5bn to the Exchequer over the next five years. More on that topic shortly.

Elsewhere, happy days are on the way for smaller UK tech businesses, which stand to gain significantly from lashings of government cash devoted to broadband investment (£5bn), extending R&D tax relief claims – possibly to cloud and data projects – and eight new technology institutes.

Commenting on proposed investments in technology, Sage UK & Ireland managing director Sabby Gill said, “The application of emerging and existing cloud technologies will be essential to get productivity back on track and we hope to see more on this in the next Budget. This could greatly impact digital adoption, which would bring with it faster processes, greater agility, better insights and the ability to forecast.”