Budget 2020 – Preparing for the 20%(?)

If the writing was ever on the wall, this budget really was it.

Chancellor Rishi Sunak – who, interestingly(?), began his City career as an investment analyst for Goldman Sachs – told us that the coronavirus outbreak is “going to be tough”.  As a result, many of the measures he announced are designed to help us cope and prepare for up to 20% of the working population being off sick at any one time.  A sobering thought.

From changes to statutory sick pay through to tax deferments for businesses and the self-employed, money is being made available to keep the economy going.

Infrastructure projects, R&D, education and, of course, the NHS – aligned to the current crisis and beyond – are all beneficiaries of a spending spree designed to give significant impetus to post-Brexit Britain.

I couldn’t help but notice there was limited (actually very little) reference to how this was all going to be paid for.  So – with daughter’s words ringing in my ears, “Mum, what you find interesting… isn’t!” – I did the rather dull thing of going online and looking at the Budget papers as soon as the Chancellor’s posterior hit the green leather. And here are a couple of stats that you might not see, or hear, from other reports and discussions:

  • Income tax receipts from 2019/20 to 2020/21 are forecast to increase by some 5.9% compared with an increase of just 1.3% between 2018 – 2020. Now I’m no economist, so I’m left asking if that’s because there are more of us in work, who are working longer and not dying as early (although Covid-19 might have other ideas about that)?

  • Businesses with a wage bill of £3m will still be paying ½ % into the Apprenticeship Levy and this is set to rise by anther £200m this year and further £100m next year (that’s a 16% increase from 2018, if the forecasts are correct). Does this also support the notion, above, that there will be more workers drawing a salary and paying tax (again, Covid-19 permitting)?

What conclusion am I drawing?  Whilst we are being prepared for the worst, the Government believes that there will be enough of us left standing on the other side of the crisis to pay for all of this.

Didn’t Benjamin Franklin once have something to say about death and taxes?

Julia Kirkland

Senior Partner