“As we enter a period of challenge, we start from a position of strength” – These words from the new Chancellor, Rishi Sunak, set a clear tone for a budget delivered in uncertain times.
As expected, the 2020 budget provided the Chancellor with the opportunity to reassure the country that the Government will be doing whatever it takes to provide stability and security to the UK economy.
To address what he acknowledged to be ‘significant, but temporary disruption’, the Chancellor announced a £30bn stimulus package to counteract the economic impact of Coronavirus. This, coupled with an additional £600bn of public spending also announced during the budget, marks the end of over a decade of austerity.
Within the context of personal finance, the measures unveiled by the Chancellor failed to live up to the recent press speculation. However, there were several key changes from yesterday that I would like to bring to your attention:
- Interest Rates: The Bank of England monetary policy committee voted unanimously to cut the base rate from 0.75% to 0.25%, reducing UK borrowing costs to the lowest level in history.
- Pensions: Currently, the standard tax-free annual allowance on pension contributions is £40,000, however, this starts to taper down to £10,000 for those with an ‘adjusted income’ of £150,000. This has now risen from £150,000 to £240,000. To counterbalance this increase, the minimum floor which the annual allowance can fall too has reduced from £10,000 to £4,000.
- National Insurance: Taking effect in the new tax year, the National Insurance threshold will be raised from £8,632 to £9,500.
- Junior ISA’s: The amount families can save into a Junior ISA or Child Trust Fund will more than double, rising from £4,368 to £9,000.
- Entrepreneur’s Relief: The Chancellor reduced the lifetime limit from £10m to £1m.
For our detailed analysis of this years’ budget please click below to view and download our full flip book summary of the 2020 budget.
If you would like to discuss any of these matters, or your financial planning in the run-up to the end of the tax year, please do not hesitate to contact your adviser.
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