Chancellor Rishi Sunak promised a 'historic' investment in his first Budget – which took place on the March 11th 2020. With Coronavirus at the forefront of everybody’s mind, there was naturally a focus on the pandemic – and how the UK will mitigate its impact.
However, his statement went further, with the government determined to deliver on its promise to ‘level up’ the country. On the Tuesday before the Budget, Sunak said: “This is a Budget for people right across the country – no region will be left behind.”
But will people agree?
Read on, as we look at the major takeaways from the Budget – and how they will impact contractors across the UK.
Stepping up to the despatch box, Chancellor Rishi Sunak tackled the all-consuming pandemic immediately.
"I want to get straight to the issue most on everyone’s mind – coronavirus Covid-19,” he began. “I know how worried people are. Worried about their health, the health of their loved ones, their jobs, their income, their businesses, their financial security.
“And I know they get even more worried when they turn on their TVs and hear talk of markets collapsing and recessions coming. People want to know what’s happening, and what can be done to fix it."
The UK economy is set to face a “temporary disruption” – which will undoubtably impact contractors – but the government has vowed to mitigate the shock with a £30bn stimulus package.
“We will rise to this moment,” he told MPs. “We will get through this together. This Budget delivers security today, but lays the foundations for prosperity tomorrow.”
The £30bn stimulus package will be divided up into different areas, with £18bn set aside to support the economy this year. Key areas to note are:
For anyone self-isolating due to the virus, statutory sick pay will be available – with the government set to pick up the tab. £2bn is in the pot for statutory sick pay and will cover up to 14 days to small & medium-sized businesses.
However, Tim Roache, general secretary of the GMB union, argues that this isn’t enough.
“There's nowhere near enough in the Budget to help working people who have to self-isolate," he argued. "Statutory sick pay is £18 per day, no one can live on that, and that's what the government seem to expect the 20% of the population who may have to self-isolate to do.”
A £5bn emergency response fund has been pledged for the National Health Service too, with however many “millions or billions” needed to deal with coronavirus. “Whatever it takes, whatever it costs, we stand behind our NHS,” Sunak stated.
With the measures for sick pay and the NHS combined, these measures represent a £7bn boost for self-employed, businesses and vulnerable people.
£1.2m in loans will be available to small and medium sized businesses, as part of a new coronavirus loan scheme. "The government will offer a generous guarantee on those loans, covering up to 80% of losses, with no fees, so that banks can lend with confidence," said Sunak. "This will unlock up to £1bn of attractive working capital loans to support small businesses, with more as needed."
In the wake of the coronavirus, the Bank of England cut interest rates by half a percentage point – dropping from 0.75% to 0.25%, which is a record low.
"The Bank of England’s role is to help UK businesses and households manage through an economic shock that could prove sharp and large, but should be temporary,” explained the Bank.
The financial fallout from the coronavirus are likely to impact smaller businesses first and foremost, but this reduction will help any contractors with long-term debts in place.
Although this news was broken before the Budget as part of an emergency response to the coronavirus, the Chancellor has confirmed that he is in constant contact with the Governor, Mark Carney – with a joint approach.
"Our responses have been carefully designed to be complementary and to have maximum impact, consistent with our independent responsibilities… The government’s response will use fiscal action to support public services, households and business."
A record-breaking sum of £600bn has also been promised to make major improvements to the infrastructure over the five-year Parliament.
Set to be the "highest levels [of investment] in real terms since 1955", the injection of funds is set to make improvements to rail and road, affordable housing, broadband and research.
"We have listened and will now deliver on our promise to level up the UK, ensuring everyone has the same chances and opportunities in life, wherever they live.
"By investing historic amounts in British innovation and world-class infrastructure, we will rebalance opportunities and lay the foundations for a decade of growth for everybody."
For contractors on the go, this is good news. Better transport, twinned with 4G coverage across 95% of the country in the next five years, will be met by many who work remotely as a big win – if it can be delivered.
However, only time will tell whether those promises are delivered upon. "We've heard it all before,” warned shadow chancellor John McDonnell. "The Chancellor seems to have forgotten we have to dig ourselves out of the £192bn hole in our infrastructure spend created by his government.”
“Boris Johnson has a track record of boastful claims followed by non-delivery and it looks like he is running true to form."
In a move that many industries expected – but also feared – a scheme which allows some sectors to pay less tax for diesel will be scrapped. To date, the rate of 11.1p/litre duty will end, with the full 57.7p/litre fuel tax coming into play.
"But the sectors using red diesel are some of the biggest contributors to our air quality problem - emitting nearly 10% of the most noxious gases polluting the air of cities like London," explained Sunak.
This news will come as a major blow to the farming industry, which relies heavily on red diesel for agricultural vehicles – and will undoubtably impact UK food production. The construction sector will also be hit.
However, it does open the door for greener substitutes to flourish. "It’s been a £2.4bn tax break for pollution that’s also hindered the development of cleaner alternatives,” Sunak continued. “So, I will abolish the tax relief for most sectors."
During the 2019 general election, Boris Johnson promised a “low tax for working people”. And that pledge has been reinforced by the chancellor, with the announcement that National Insurance Contributions will increase from £8,632 to £9,500.
According to Sunak, that’s a typical employee saving of £104 a year. Although, IFS estimates it’s closer to £85 a year. Either way, this is a small win for contractors – with a little extra in your pocket at the end of the year.
The proposed changes to IR35 have been a hot topic of late. The plan to extends the legislation to the private sector from April 2020 was previously announced by the government and was expected to be made concrete during the Budget. However, Sunak didn’t cover IR35, which has led many to think the change will go ahead as previously stated.
This shift was set to impact a further 170,000 private sector contractors on top of those already affected in the public sector. They could be forced to pay tax like an employee if they’re found to be essentially working as one. That includes having their working conditions, hours, locations and tasks determined by someone else – a boss.
If they’re found to be working as ‘disguised employees’, these contractors will be forced to pay tax through pay-as-you-earn and pay any unpaid tax. Unfortunately, paying tax like an employee won’t entitle them to statutory benefits though. So, they will still need to cover their own sick pay, pension and holidays.
Whether you want to circumnavigate IR35 or the coronavirus outbreak has got you concerned about a lack of sick pay, an umbrella company can solve many of the common problems contractors face.
Ready to find your perfect umbrella company? Visit Umbrella Supermarket today, to compare quotes from leading providers in a matter of minutes
Any contractor considering switching to an umbrella company will want to know how to find the best provider to work with.
Although you could spend your precious time and energy searching the web for the best umbrella company, there is an easier way – using an umbrella calculator.
In this guide, Umbrella Supermarket explains why every contractor should use an umbrella calculator in 2021.
If you are considering contracting you will need to decide on PAYE or umbrella.
It can be a difficult decision to make and contractors will inevitably be questioning which option will be the best for them.
To help every contractor get on the right track for them, in this guide Umbrella Supermarket looks at PAYE vs umbrella, outlining the key differences and how this will impact you.
There are many reasons that contractors across the UK opt to work under an umbrella company.
Umbrella companies offer an easy way to contract and remove the need for the contractors to worry about the burdens of admin, finances, tax and IR35, all things that limited company contractors have to deal with.
For this reason, many contractors will be weighing up their options and questioning whether it is worth using an umbrella company in 2021. To help make the decision that little bit easier, Umbrella Supermarket has put together this guide on the pros and cons of using an umbrella company.
Any contractor that is considering operating through an umbrella company in 2021 will need to understand Umbrella Company fees - from why an umbrella company charges fees, how they are paid to how much the contractor will pay.
In this guide, Umbrella Supermarket answers those all-important questions to help every contractor know exactly where they stand when it comes to umbrella company fees.
If you’ve made the decision to contract through an umbrella company in 2021, you will next need to find an umbrella company that’s right for you.
After all, there are lots of umbrella companies out there, so how do you know which one to choose?
To help you find the best umbrella company for you, in this guide Umbrella Supermarket outlines what makes a good umbrella company, so you can rest assured you’re making the right move.
One of the many advantages to operating through an umbrella company for contractors is that they become an employee of their chosen provider.
In turn, this means that the contractor will be automatically enrolled onto the umbrella company’s workplace pension scheme.
To help contractors find out more about umbrella company pensions Umbrella Supermarket has put together this handy guide.
If you are considering contracting through an umbrella company you will naturally have questions and queries over how they work.
After all, making the move to umbrella can be a big step for contractors. To help, in this guide Umbrella Supermarket explains how to get started with an umbrella company and share our top tips for using one in 2021.
PAYE or umbrella is a question asked by every contractor. Which one you opt for will have a big impact on your contracting career and lifestyle. So, it's important to make the right decision for you.
To help makes things a little bit easier, Umbrella Supermarket has put together this guide on PAYE or umbrella, outlining the key differences between each, to help you make the best and most informed decision for you.
One of the many benefits to working through an umbrella company is that you will receive holiday pay as well as a range of other statutory benefits including sick pay, maternity and paternity pay.
To find out more about umbrella company holiday pay, and how to calculate how much you will be entitled to, Umbrella Supermarket has put together this handy guide.
Contractors must make several decisions throughout their contracting careers. One big decision contractors have to make is how they will operate.
One way that contractors can work is through an umbrella company.
Umbrella companies have become an increasingly popular way to contract in the past few years, offering many benefits to the contractor. But, how do you know whether this option is right for you?
To help every contractor make the right decision for them, in this guide, Umbrella Supermarket explains when not to use an umbrella company.
There are tons of benefits to using an umbrella company, which is why they have become such a popular option for contractors in recent years.
After all, an umbrella company takes away the stress and hassle of operating through a limited company whilst offering contractors a range of advantages, such as statutory rights, paying them a salary, deducting correct tax levels and National Insurance, and taking care of tasks like expense processing and invoicing.
However, as more and more contractors opt to use the services of an umbrella company, more providers have started to claim that they are HMRC approved.
To bust the myths around HMRC approved umbrella companies and get straight to the facts, in today's guide Umbrella Supermarket look at whether HMRC approved umbrella companies really exist, so you know exactly where you stand.
If you're considering making the leap to contracting, you will understandably want to know how much you will have to pay in umbrella company costs. After all, this amount comes directly out of the contractor’s pocket, so it’s important to be clued up on how much you should expect to pay.
To help contractors, in this guide Umbrella Supermarket answer the all-important question of how umbrella companies cost in 2021.
