Budget UK 2020 – March date and predictions for Rishi Sunak’s plans on stamp duty and pensions – The Sun

THE Budget is a chance for the government to announce some radical changes to public spending – but how will it affect the cash in your pocket?

Ministers have promised that the Budget 2020 will lay down plans to « unleash Britain’s potential » and « open a new chapter for the economy ».

Read the latest Budget updates from our live blog here

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But since his resignation, Rishi Sunak has been appointed the new Chancellor of the Exchequer which could change a few things.

Given the global spread of the coronavirus, it’s also set to be a very different Budget than it would’ve been.

Despite speculation that the job change would delay the Budget for a second time, it’s still set to go ahead as planned tomorrow – March 11.

The Budget is read out in the House of Commons by the chancellor and lays out the country’s finances for the year.

It will be the first Budget for the UK in more than 40 years as a non-EU member state, after Britain exited the EU on January 31, 2020.

But Royal London’s Steve Webb doesn’t expect any major changes so close to the start of the new financial year.

He said: « The new government will have had little time to draw up detailed plans to overhaul major areas of the tax system.

« With a Budget just a few weeks before the start of the new financial year on April 6, it seems particularly unlikely that we will see major changes to take effect for 2020/21. »

Even so, here are the changes experts are expecting to be announced and how you it will affect your finances.

Pension tax relief shake-up

Two million lower-income earners miss out on 20 per cent tax relief because of the type of scheme their employer puts them into.

Those who are on a « net pay » scheme, typically part-time or low-pay workers, pay their pension contributions before tax has been deducted.

A « relief at source » scheme takes the pension contribution after tax has been paid, tax relief is then added to the employee’s savings directly by HMRC, increasing your pension contribution.

Pension professionals are hoping the government will use the Budget as an opportunity to make sure these people are protected.

« The lowest earners deserve every help they can get to save for their retirement, » said Steven Cameron, pensions director at financial provider Aegon.

Mr Javid isn’t expected to make any changes to the controversial – and expensive to run – triple-lock, which increases the state pension by inflation, earnings, or 2.5 per cent, whichever is higher.

More help for first-time buyers

In the Queen’s speech, the government promised to help first-time buyers by launching the First Home scheme that will see local people get a 30 per cent discount on property.

The government claims this will save buyers tens of thousands of pounds when becoming homeowners.

Details on how this will be funded have not yet been revealed so we’re hoping the Budget will clear this up.

The monarch’s speech also revealed plans to introduce a « lifetime deposit » for renters which can be transported between properties.

This would stop the need for tenants to find the cash for a new deposit while money is still tied up in their current home.

« Given the Conservatives’ recent pledges to help the north and the midlands, we suspect the Budget may well focus on creating greater incentives to develop property in these regions, » Yann Murciano, chief executive of Blend Network added.

Plans for a radical shake-up to stamp duty were dropped by the Tories in their manifesto.

It would have seen the threshold raised from £125,000 to £500,000 as well as lowering the top rate of tax from 12 per cent to 7 per cent.

It’s unlikely that Mr Javid will announce any changes to the current system.

National Insurance tax cut

Around 30million workers are set to benefit from a tax cut first promised in the Conservative manifesto, and then formally confirmed in January 2020.

The amount you can earn before making any National Insurance contributions is currently £8,632 but it will rise to £9,500 a year from April 6.

The move will leave employees earning more than £12,600 around £100 a year better off.

But Mike Parkes, from GoSimpleTax warned: « The changes to National Insurance could cause issues around pensions unless careful consideration is given to its management.

« Everyone needs 35 years of National Insurance Contributions to qualify for the full state pension, so lifting people out of NI now could leave them better off today, but they would pay the price in retirement. »

The PM has pledged to raise the threshold to £12,500 by the middle of the decade.

Scrapped tampon tax

The hated tampon tax is to be abolished in the Budget, in a move to show the Tories are delivering on their election promises.

Chancellor Rishi Sunak will scrap the 5 per cent VAT rate on all sanitary products to cut their cost.

The reduction is a Brexit dividend, as under EU law the government has been forced to levy a sales tax on the vital items.

Council tax rise to fund social care costs?

The government promised that « no one who needs care has to sell their home to pay for it » in the Queen’s speech.

This is set to benefit the ageing population who currently struggle to find the funds for suitable care in old age.

But it may come at a cost to younger generations.

The Ministry of Housing, Communities and Local Government (MHCLG) announced in December 2019 that it will give local councils the power to add 2 per cent on council tax to cover the costs.

Mr Cameron from Aegon says he hopes the Budget is used to develop a « sustainable solution to the social care crisis ».

He added: « In our view a cap on what individuals are required to pay is essential if people are to be incentivised to plan ahead without fear that « catastrophic » care costs will wipe out their life savings and inheritance aspirations. »

Guaranteed access to cash machines

Access to cash everywhere in Britain is set to be guaranteed in the Budget under a new law to ensure machines stay open.

Rural communities, the old and the less well-off are finding it ever harder to withdraw cash as bank branches and lone ATMs close.

But two million people still rely on notes and coins for everyday spending.

Under the new law, those who rely on cash will always be able to access it.

Mr Sunak will hold talks with banks and regulators to thrash out how to enforce the move.

Cash to protect against coronavirus?

The Chancellor has addressed the ongoing concern of coronavirus, but hasn’t specifically said if he’ll be setting aside any cash to protect businesses.

While it isn’t clear if the Budget 2020 will include a coronavirus fund, the BBC says the Chancellor is expected to at least outline the costs so far.

According to The Guardian, Mr Sunak may also temporarily reintroduce the statutory sick pay rebate.

That policy, which was scrapped in 2014, allowed smaller firms to claim a rebate on part of the cost of paying sick pay when the proportion of their staff who are off sick passed a set threshold.

Speaking after attending a COBRA meeting last week, Mr Sunak said: « We are well prepared for this global threat and, as the wider economic picture becomes clearer, we stand ready to announce further support where needed. »

Cash boost for parents of premature babies

Parents of sick and premature babies will be able to get an extra £160 to help them cope under new measures in the Budget.

Current laws have paternity and maternity leave kicking in from the moment the baby is born – even if that is weeks or months early.

Treasury minister Kemi Badenoch said the extra leave would be paid for out of the government’s pocket, rather than businesses.

Extra cash to help the environment

According to the Treasury, the chancellor will prioritise the environment in his commitment to spending.

The government has already pledged to Britain becoming carbon-neutral by 2050 but hasn’t announced any spending related policies yet.

These could include some of the promises made in the Tory election manifesto, such as making homes more energy efficient and ploughing £9.2billion into insulating schools and hospitals.

The Budget could also outline plans for an £800million investment into technology that stores CO2 emissions and converts it into energy, and £500million to help reduce our industrial carbon footprint.

Rise in fuel duties?

Tory MPs have warned the Chancellor that hiking fuel duty in the Budget will hurt the NHS while it is under strain dealing with the coronavirus outbreak.

They said ending the fuel duty freeze, which would add 2p per litre to petrol and diesel, would increase the cost of transportation for ambulances and other key NHS vehicles.

But a recent dive in crude oil prices could give him cover to announce a rise.

Meanwhile, two in three working-class voters who handed Boris Johnson his election victory will desert him next time if he puts up fuel duty, according to a survey.

Frozen or cut spirits duty?

Distillers have urged the “gin and tonic tax” to be cut to help boost Treasury spirits in the Budget.

Cutting duty will boost the nation’s coffers and deliver more jobs for the booze industry, according to an analysis by the UK Spirits Alliance.

Spirits in the UK remain among the highest taxed in the world with almost £3 in every £4 going to the Treasury.

There has been a boom since 2014 when freezes and cuts in tax have seen revenues rise by nearly a quarter to £735million.