The Chancellor launched a £30bn fiscal stimulus package to counter the shock of the coronavirus outbreak with breathing space granted to small businesses, whilst at the same time looking to deliver on the Conservatives’ pledge to address regional inequalities.
Earlier in the day, the Bank of England’s Monetary Policy Committee unanimously agreed to reduce the main bank rate by half a percentage point to 0.25 per cent at a special meeting, along with measures to help the flow of credit and support businesses potentially facing cash flow issues.
What it means for your money
Here is a summary of how the key measures will affect your personal finances:
Pensions taper threshold to increase by £90,000 to £200,000
The adjustment to the annual allowance taper applies to all high earners in the private and public sector, not just NHS staff. Although it remains just as complex.
Some people will find their ability to save into pension increase by up to £30,000 from this April. However, for those affected by the tapered annual allowance their allowance could reduce to as low as £4,000 instead of the current £10,000, where adjusted income is over £312,000.
Pension Lifetime Allowance
The Chancellor announced an increase in lifetime allowance for 2020 to 2021, in line with the Consumer Price Index. So, from 6 April the pensions Lifetime Allowance will be £1,073,100.
Junior ISA hike
The amount families can save into a JISA or Child Trust Fund will be more than doubled in 2020-21, increasing from £4,368 to £9,000, and is designed to encourage a long-term savings habit.
Adult ISA limits remain at £20,000.
Entrepreneurs’ relief changes come in immediately today, reducing lifetime limit on qualifying gains from £10 million to £1 million with some anti avoidance measures for those who have tried to sell before the change.
Interest rate cut
The emergency cut to interest rates will immediately reduce mortgage repayments for homeowners on tracker and variable-rate mortgages. The cut was another blow for savers, making the personal savings allowance virtually redundant.
National Insurance threshold
The government has raised the National Insurance threshold from £8,632 to £9,500 a year, giving 31 million employees a tax cut. The average worker will be better off by £100 a year.
No delay to IR35 changes
Controversial IR35 reforms will be in the Finance Bill as previously announced to start this April.
A £12bn package of measures to support public services, individuals and businesses was unveiled, making it easier for the self-employed to claim universal credit and Employment Support Allowance benefits if they cannot work, including a £500m hardship fund to be distributed by local authorities.
As previously announced, statutory sick pay will be made available from the first day of self-isolation.
£600bn in infrastructure investment unveiled
The Chancellor pledged to triple the average net investment made over the last 40 years into rail and road, affordable housing, broadband and research.
Now, more than ever we need to invest in a low carbon economy and the Chancellor unveiled several initiatives, including:
- £500m to support the rollout of new rapid charging hubs, so that drivers are never more than 30 miles away from being able to charge up their car.
- A new plastic packaging tax to encourage the use of more recycled packaging.
- £640 million to plant more than 40 million trees and restore £35,000 hectares of peatland.
- Diesel subsidies will be scrapped for most sectors, excluding agriculture.
New non-UK resident stamp duty surcharge
From April 2021, a new stamp duty land tax surcharge of 2% will be brought in for non-UK resident buyers of property, affecting overseas buyers and expats.
The 2% surcharge will be used to end rough sleeping in this Parliament.
We’ll be exploring several of these measures in further detail over the coming weeks.