Under the spotlight – the first Budget of the decade
In the current climate, there is uncertainty in all of our lives with both health and financial concerns. However, while we are all understandably focusing on the here and now, it might be worth using this time to take a step back and review your long-term financial wellbeing as well. This newsletter takes a look at some of the areas you might want to consider. Of course, we are on hand to support you through any challenges ahead.
Chancellor of the Exchequer, Rishi Sunak, delivered his first Budget on 11 March and unleashed the largest increase in public investment for several generations, in an effort to boost the economy and see the country through the coronavirus crisis.
A dramatic Budget Day began with the Bank of England sanctioning an emergency half-point interest rate reduction amid growing concerns about the economic impact of COVID–19. On 19 March, a further cut to 0.1% was announced. Later, Mr Sunak revealed updated GDP projections which, excluding an inevitable but incalculable coronavirus impact, suggested the UK economy would grow by 1.1% in 2020–21, down from a previous forecast of 1.4%.
The Chancellor’s principal change in relation to personal taxation was to increase the National Insurance threshold to £9,500, which will save most workers around £100 annually from April. Income Tax bands, however, including the Personal Allowance above which people start paying tax, and higher-rate thresholds were maintained at current levels.
As previously indicated, the new single-tier State Pension will increase from £168.60 a week to £175.20 in April, while the older basic State Pension will rise from £129.20 to £134.25 per week. Among other pension changes, the Chancellor announced a £90,000 increase in the tapered Annual Allowance thresholds.
Savings and investments
The main savings-related announcement was a substantial increase in the JISA (Junior Individual Savings Account) allowance and Child Trust Fund annual subscription limit from £4,368 to £9,000 this April. The ISA (Individual Savings Account) allowance, including the £4,000 Lifetime ISA allowance if used, remains unchanged at £20,000.
Mr Sunak also announced the lifetime limit on gains eligible for Entrepreneurs’ Relief has been reduced from £10m to £1m. This reflects a belief that the concession has not provided a major boost to entrepreneurial activity.
The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated.