6 March 2020  /  By Andrew Ellinas LL.B.

2020 Budget Predictions

The large Conservative majority has given the newly-appointed chancellor, Rishi Sunak, the opportunity for a radical reform of taxes and public spending in his first budget on Wednesday 11th March. 

What changes can we expect?

Stamp Duty

One change that’s almost certain to appear in the budget is a 3% stamp duty surcharge for overseas homebuyers (individuals and companies, including expats wanting to move back home). This would be charged on top of all other stamp duty already payable, including the 3% surcharge on second homes and buy-to-let properties. The new 3% rate – which would only apply to England – was a Conservative election pledge.

It is also possible that the SDLT threshold might be raised from £125,000 to £500,000 and lower the top rate – which applies above £1.5m – from 12% to 7%. This was dropped from the election manifesto, but the chancellor could decide to bring this policy back to life.

Personal Taxation

The main personal finance pledge in the Tory's election manifesto was a tax cut for more than 30 million workers in the form of an increase in the threshold for paying National Insurance. This will save all workers earning more than £12,600 around £100 a year. This is likely to be confirmed in the Budget.

Wealth Tax

Boris Johnson has ruled out the option of introducing a wealth tax - or "mansion tax" - which would be levied each year on expensive properties mainly located in the south.

Inheritance Tax

A cross-party group of MPs has called for a large cut to inheritance tax, and a shake-up to the way it works. At the heart of these proposals is a plan to cut inheritance tax to 10%, down from its current rate of 40%. A number of tax-free allowances would also be dropped. Currently, gifts between family members are tax-free if gifted seven years before the giver dies. The group is calling for this rule to be scrapped in an effort to stop owners of larger estates avoiding taxes by giving away their wealth and surviving seven years. There would also be a £30,000 cap on cash gifts over a lifetime. It’s unclear exactly how many people these changes would affect. Currently, only 5% of estates pay inheritance tax.

Social Care

In the Queen's speech, the Government promised to get a grip on the social care crisis with an extra £1bn of funding for councils to “ensure that the social care system provides everyone with the dignity and security they deserve and that no one who needs care has to sell their home to pay for it”.  There could be hidden tax rises to pay for social care, however, as councils will be able to increase council tax by 2pc to raise extra cash.

In the Queen's speech, the Government promised to get a grip on the social care crisis with an extra £1bn of funding for councils to “ensure that the social care system provides everyone with the dignity and security they deserve and that no one who needs care has to sell their home to pay for it”. There could be hidden tax rises to pay for social care, however, as councils will be able to increase council tax by 2pc to raise extra cash.