Budget 2020: some highlights at a glance
Residential Property
By Angus Williams, Partner, Residential Property
As many expected, a stamp duty surcharge for overseas buyers has been introduced. At an additional 2%, we would suggest that the surcharge will increase tax revenue without significantly dissuading overseas buyers from investing in the UK housing market. We think it encouraging that at first glance the surcharge will not come into effect until April 2021 thus helping to kick start the markets particularly in London, where we have started to see some long awaited signs of recovery.
Construction & Engineering
By Catherine Welch, Partner, Construction & Engineering
The budget is out and positives can be drawn for the construction industry with an investment of over £600 billion for infrastructure over the next 5 years. Investment has been secured for road networks with £27 billion on strategic roads between 2020 and 2025, and a £500 million a year Potholes fund. As ever the devil will be in the detail when the government publishes the delayed National Infrastructure Strategy later in the year. We will have to wait and see when and how quickly the money will be released into the industry and along national and regional supply chains.
Real Estate and Retail
By Dan Farrow, Paralegal, Real Estate
As part of a £30bn package of measures introduced at today’s Budget aiming to tackle the effects of the Coronavirus outbreak, Chancellor Rishi Sunak has announced that certain retail, leisure and hospitality firms will benefit from a business rates ‘holiday’ in the coming financial year.
The move, clearly aimed at smaller enterprises, will allow businesses with properties of a rateable value of less than £51,000 to avoid any business rates liability whatsoever on those properties for the coming financial year. While the move will be welcomed by many small business owners who will be afforded increased liquidity and flexibility to deal with any negative effects of Coronavirus, the move does not benefit larger businesses whose properties fall over the rateable value limit or who have already claimed the limit of available tax relief over the past three years.
The Chancellor also announced that the business rates scheme as a whole would be reviewed, amid complaints from high street operators and the British Retail Consortium that the current system is unnecessarily burdensome and puts ‘bricks and mortar’ retailers at an unfair disadvantage to online competitors. The results from the review will be published in the autumn.
Corporate
By Iain Butler, Partner, Corporate
This was a Budget representing the end of austerity and a significant public spending plan.
Against the backdrop of a Budget representing the end of austerity and a significant public spending plan, we were expecting there would be a reform and review of Entrepreneurs’ Relief (ER) so the reduction in the lifetime allowance from £10 million to £1 million isn’t necessarily a surprise.
As the restriction in the lifetime allowance has taken effect immediately, it’s now too late for those who were trying to complete deals before the end of the tax year.
Sadly, the changes are likely to have most impact on business owners planning for their retirement and who have spent many years reinvesting proceeds in anticipation of a future exit, rather than serial established entrepreneurs who are less likely to focus on ER (and who many argue will have already received significant return for their hard work and investment).
The key question is whether what’s left of ER will do anything to incentivise truly entrepreneurial activity and if, more likely, the review of the Enterprise Management Incentive (EMI) scheme also announced will actually do more for early stage, high-growth companies by enabling them to attract, recruit and retain the best talent.
It will be interesting to see what happens.