Budget 2020: What you need to know
Written by Robert Bester, Consumer Finance Expert Robert has been a writer for six years, specialising in consumer finance and the UK lending market. Concentrating on consumer credit products, Robert writes informative articles that help customers manage their personal finances efficiently.
18th January 2021
4 minute read
Whilst the previous UK Budget was overshadowed by Brexit, our new Budget for 2020 is similarly afflicted, but this time by Coronavirus.
Health concerns aside, there has already been major economic disruption including events being postponed, transport to affected areas cancelled and many workers having to self-isolate to stop the spread of the virus. The Budget includes many announcements that are directly linked to supported affected businesses and additional support for workers who have lost income.
Presented by our new Chancellor of the Exchequer, Rishi Sunak, this has been the first budget for 18 months following a Conservative majority government being announced in December. This means that the policies announced will not face as much opposition so, despite fears over coronavirus, there should be at least a bit more confidence in the decisions made.
We’ve put together a summary of everything that has been announced in the Budget 2020, along with policies that had been announced prior to the full budget being disclosed.
What has already been announced?
- Conservative pledge for tax cut for more than 30 million workers by increasing threshold for National Insurance threshold rising from £8,632 to £9,500 – saving £100 per year
- £600bn for infrastructure projects over 5 years
- Extra money for potholes - £2.5bn to fix 50 million potholes in the next 5 years
- Bank of England cuts base rate to 0.25%
As expected, the Chancellor announced the Conservative pledge of increasing the threshold for National Insurance was announced during the budget, meaning that 30 million workers would save £100 per year.
There was also a pledge of £600bn for infrastructure over the next 5 years, as well as £2.5bn to fix 50 million potholes on British roads.
The morning prior to the budget, there was also the announcement that the Bank of England had cut the base rate to the lowest amount in history, just 0.25%, in response to the coronavirus.
Budget 2020: Full summary
The major theme from the budget, delivered by Rishi Sunak, was “We will get through this together”. This is in reference to coronavirus and in relation to the new majority government and their first budget announcement. For the other reforms, the Chancellor listed them and firmly announced, “We will get it done.”
He also commented that the UK needs to “level up”, referring to our approach to climate change. This means transforming our thinking to ensure we as a country are moving towards a greener future.
There was also a reference to “Conservatives: the party for public services”, given the £6bn investment in the NHS to support and help improve the health service in the future. This will equate to 50,000 new nurses, 50,000 new appointments and 40 new hospitals.
For everything else, we’ve broken down the individual announcements into various categories below:
The biggest announcement referring to Coronavirus was that collectively, there would be up to £30bn pumped into the economy to counter the affects of the virus and the disruption that it has caused and will cause in the future. There was also a reference to the government covering sick pay costs for firms with under 250 staff. Other announcements referring to coronavirus are listed below:
- Statutory sick pay paid to all those who choose to self-isolate
- £500m hardship fund to help vulnerable people
- Small firms able to access Business Interruption Loans of up to £1.2m
- 30 billion of support for the effects of coronavirus on the UK
- Public investment will be at its highest level in real terms since 1955
- £640m for Scottish government, £360m for Welsh government and £210 for Northern Ireland Executive
- Abolish tampon tax – no VAT on women’s sanitary products
- Scotch whisky – 1 million pounds to support Scottish food and drink overseas, 10 million to go towards research and development to help distilleries go green,
- All alcohol duties frozen
- Planned increase in spirits duty cancelled
- Planned increase in beer duty cancelled
- Business discount rate for pubs will rise to £5,000
- Fuel duty frozen until 2021
- £130m of new funding to extend start up loans and £200m for life sciences
- Entrepreneurs relief is ineffective, expensive and unfair – reformed to reduce lifetime limit from £10m to £1m
- Research and development expenditure credit increased from 12% to 13%
- Employment allowance to rise to £4000 to help small businesses
- Corporation Tax will remain at 19%
- £500m to support rapid charging hubs for electric cars
- Investment in Research and Development increased to £22bn per year.
- £800m to be invested in new blue skies funding
- From April 2022 electricity levy frozen and increased for gas
- New plastics packaging tax to be introduced
- Tax relief for red diesel abolished for most sectors
- £1bn investment for green transport solutions
- £120m pledged to repair flood defences damaged in winter floods
- Flood defence funding doubled to £5.2bn
- £640m for new ‘nature for climate’ fund
- £800m investment to establish two or more Carbon Capture and Storage Clusters by 2030
Transport and communications
- £27bn strategic investment in roads and motorways
- £2.5bn set aside to repair 50 million potholes over the next five years
- 4G coverage will reach 95% of the country in the next 5 years
- Reading tax abolished
- VAT on digital publications scrapped – moving it in line with physical books
- Affordable Home Programme given extra £12bn
- £650m to help rough sleepers into permanent accommodation
- Stamp duty surcharge for non-UK residents introduced at 2% from 2021
- New Building Safety Fund worth £1bn to remove dangerous cladding from high-rise buildings
- Immigration Health Surcharge increased to £624
- £10m donation to support veterans with mental health needs
- Over £6bn of funding for the NHS - 50k more nurses, 50k new appointments, 40 new hospitals
Start your own budget in 2020
Now that we’ve given you the full summary on this year’s budget, it’s time for you to look after your own personal finances. Check out our article on ‘What would you give up to save money?’ and find out how you can save money in 2020.
Switching current accounts can also help you organise your personal finances and allow you to pick up a switch incentive too. Find out more using the link below.