Budget Set to Take Place in February Once Brexit is Resolved

Tax Comments Off on Budget Set to Take Place in February Once Brexit is Resolved

The new government intends to announce the 2020/21 tax rates, bands and allowances in a full Budget next month.

Prime Minister Boris Johnson secured a handsome majority on 12 December 2019, and swiftly returned Sajid Javid to the position of Chancellor.

Javid was poised to deliver his first Budget speech in November 2019, only for it to be cancelled following the decision to call the first December general election since 1923.

While resolving Brexit remains the biggest priority for the new government, time is running out to legislate for any tax changes before the start of 2020/21.

Johnson aims to finalise the UK’s departure from the EU before the end of this month, before holding an early Budget.

It is likely that a full Budget in February will take the place of the lower-key Spring Statement, which has been the norm in recent years and usually takes place in March.

Prior to the election, Johnson promised “a post-Brexit Budget in February, which will cut taxes for hardworking families”.

The Conservative manifesto also promised to freeze the rates of national insurance contributions, VAT and income tax, as well as reforming the insolvency rules and the audit regime.

Also in line with a manifesto pledge, the current national insurance threshold looks set to remain the same for 2020/21 – before increasing to £9,500 for 2021/22.

The main 19% rate of corporation tax is legislated to reduce to 17% on 1 April 2020, but Johnson confirmed this is no longer going ahead. That should be contained in Javid’s Budget.

While on the topic of corporation tax, the rate of research and development (R&D) tax credits should rise from 12% to 13% in line with a manifesto promise.

Business groups, backed by a recent Treasury Committee review, could also get their wish to see the existing business rates system reformed in England and Wales in time for April 2020.

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