Legislation & Financial News

Budget 2020 cancelled

The Treasury announced on Wednesday afternoon that there will be no Budget this autumn which came as little surprise.

There is still expected to be a spending review later in 2020 to determine the expenditure limits for Government departments. This is typically a three-year review but the previous Chancellor, Sajid Javid in August 2019, ahead of Brexit, set out a one-year review. In the face of continued uncertainty, we may see another short-term spending review from his successor.

24th September 2020

The Chancellor, Rishi Sunak had asked the Office for Budget Responsibility (OBR) earlier in September to prepare an economic and fiscal forecast, which is usually presented alongside the Budget, to be published in mid to late November.

The vague nature of the date had led some commentators to speculate there wouldn’t be a Budget this year but rather it would be postponed until next year when the picture on Brexit and coronavirus will be clearer.

There are sound arguments for deferring the Budget, probably until next spring:

A Budget in December would have arrived before the expected peak of winter COVID-19 infections.

There also remains the little matter of finalising Brexit. The next Finance Bill is due to contain controversial measures; covering unilateral UK Government decisions on which goods should be subject to duties when crossing into Northern Ireland. The Government might prefer to delay publishing that Finance Bill until the transition period ends on 31 December 2020.

Whatever would have been in a (late) Autumn Budget would probably have needed tweaking in the light of economic conditions (COVID-19 and post-Brexit) at the time. While tax changes are expected, it seems likely that any serious tax rises will be deferred until the economic landscape becomes more settled.

Things to consider

It’s impossible to predict what the Chancellor may include in the Budget however what is quite clear is that Government will need to raise additional revenue and therefore some of the current tax allowances when viewed with the benefit of hindsight may prove to have been quite generous.

If you’re intending to use a particular allowance – making a pension contribution, incurring capital gains or making Inheritance Tax gifts for instance, it may be wise to do these sooner rather than later. In the current economic climate it’s unlikely that tax rates will be falling in the short term.

If you would like to discuss your individual circumstances, please get in touch.