In a Budget understandably dominated by the COVID19 challenges, the Chancellor still felt he had room to meet the manifesto pledges to ‘get it done!’. However, what does the Budget mean specifically for the transport sector?
Well firstly, the Chancellor decided to continue the 10-year freeze on fuel duty. Albeit he is also attempting to stimulate green development, that one may reasonably assume will be aimed at advancing the day when carbon emitting vehicles face much more severe tax challenges or, indeed, are outlawed altogether.
The Chancellor also confirmed that the rate of corporation tax would not reduce, as previously announced, but would remain at 19%.
In what will probably be seen as one of the largest spending Budgets of recent times, the Chancellor also increased the National Insurance threshold to £9500 per year. This means that employees will earn more before they pay NIC. Structured Buildings Allowances, which can be very useful in the warehousing sector, were increased from 2% to 3% providing a further tax break. As does an increase in the Employment Allowance to £4000.
Additional funding to provide £27bn of ‘new tarmac’ was also announced, aimed at repairing potholes and improving access to ports, airports and other key junctions.
As with most Budgets however, whilst there were a number of positive announcements there were also things which may not be welcomed by the transport sector or businesses generally. Principal amongst these is the reduction in Entrepreneurs Relief from a lifetime limit of £10m to just £1m. As a result of this, the tax rate paid by business owners to sell up or cash in will significantly increase.
The Chancellor also announced more funding for HM Revenue & Customs who will be tasked with collecting an additional £4.4bn in taxes. This could well mean that, in the short to medium term, businesses can expect more tax enquiries and challenges from HMRC.
Finally, to conclude, £30bn of support measures were announced to combat the effects of Coronavirus. These measures include making Statutory Sick Pay payable from day one of someone’s absence from work and, for those businesses with under 250 employees, the cost of this will be paid for by the government. In addition, the government is to provide small firms with the ability to access business interruption loans of up to £1.2m.
When the Budget measures announced today are added to the 0.5% interest rate cut announced by the Bank of England hours earlier these measures should provide a boost to the economy, how effective that boost might prove to be in light of the other significant head winds remains to be seen as does the overall effect of the country’s borrowing requirements.