Wednesday 11th March, Chancellor Rishi Sunak delivered his first Budget in the House of Commons, detailing the government’s tax and spending plans for the year ahead. Coronavirus was indeed high on the agenda, with the government dedicating £30bn to fight the virus over the following months, but how does the Budget affect the recruitment industry and what opportunities could it lead to?
TBOS shares our feedback on the Budget 2020…
PERSONAL TAXATION AND WAGES
- National Insurance Contributions tax threshold to rise from £8,632 to £9,500 saving people just over £100 a year
- Those aged 25 and over will get the National Living Wage of £8.72 an hour, a rise of 6.2%, with younger workers also getting more – this will be paid by employers
‘The increase in national insurance threshold will result in lower NI contributions and will mean more disposable income, with an extra £100 per annum.
With no other new announcements on income tax or national insurance there will be little change in the tax arising on income in 20/21 tax year.’
TRANSPORT, INFRASTRUCTURE AND HOUSING
- More than £600bn is set to be spent on roads, rail, broadband and housing by the middle of 2025
- There will be £27bn for motorways and other key roads, including new tunnel for the A303 near Stonehenge
- Ministers say this represents the largest capital investment in infrastructure for generations
- £2.5bn will be made available to fix potholes and resurface roads over five years
- Further education colleges will get £1.5bn in new investment in their buildings
- New £1bn fund to remove all unsafe combustible cladding from all public and private housing higher than 18 metres
‘This is good news for recruiters engaging with clients in the construction and civil engineering sectors. There will be plenty of new opportunities, given the additional spend on fixing and maintaining road surfaces along with the commitment to remove all combustible cladding from public and private buildings.’
NEW TREASURY OFFICES
- Treasury to open new office in Wales and Scotland
- New civil service hub in the North of England, employing 750 staff
‘This will be a great opportunity for the recruitment industry to engage with the treasury on the run up to opening their new offices and civil service hubs across the UK. News of this will likely be reported on nearer the time of their recruitment drive.’
CORONAVIRUS AND PUBLIC SERVICES
- £5bn emergency response fund to support the NHS and other public services
- Statutory sick pay will be paid to all those who are advised to self-isolate, even if they have not presented with symptoms
- Self-employed workers who are not eligible for sick pay will be able to claim contributory Employment Support Allowance
- The ESA (Employment and Support Allowance benefit will be able available from day one, not after a week as now
- £500m hardship fund for councils to help vulnerable people
- Firms with fewer than 250 staff will be refunded for sick pay payments for two weeks
- Small firms will be able to access “business interruption” loans of up to £1.2m
- Business rates in England will be abolished for firms in retail, leisure and hospitality sectors with a rateable value below £51,000
- £6bn in extra NHS funding over five years to pay for staff recruitment and start of hospital upgrades.
‘UK employees now receive statutory sick pay from the first day off work, to help contain coronavirus. This is paid by the employer, but smaller businesses with fewer than 250 employees can reclaim the cost of paying sick pay for the 14 days of isolation. This will benefit TBOS clients as it ensures the cost of employees self-isolating will not have to be covered by them.
Those who are not eligible for sick pay, particularly the self-employed, will be able to claim Employment and Support Allowance (ESA) from day one of “illness” rather than day eight.
ESA is paid to those who are too sick to work, provided they meet certain conditions. It is worth £73.10 a week, or £57.90 for the under-25s. The complexity of this benefit may mean this change is unlikely to affect a lot of people. This could affect contractors but it is unlikely as most will be employed through limited companies or paid via PAYE schemes through the agency, or umbrella companies they engage with.
Business interruption loans may also help TBOS clients who notice a significant loss in business, while there are no guidelines on how these will be obtained it should provide some comfort to those who are concerned about potential cash flow issues presented by issues surrounding coronavirus.
The commitment for additional funding in the NHS represents a significant opportunity to any agency that currently supports the NHS by providing temporary workers at any level.’
BUSINESS, DIGITAL AND SCIENCE
- Entrepreneurs’ Relief will be retained, but lifetime allowance will be reduced from £10m to £1m
- £5bn to get gigabit-capable broadband into the hardest to reach places
- Science Institute in Weybridge, Surry to receive a £1.4bn funding boost
- An extra £900m for research into nuclear fusion, space and electric vehicles
- Those working from home, who already claim £4 a week off their income tax bill, will be able to claim £6 from April
- VAT on digital publications, including newspapers, books and academic journals to be scrapped from December
‘As we enter a new decade of technology, the government have made preparations to prepare the UK and this shows in the new Budget. With funds dedicated to science, nuclear fusion, space and electric vehicles, these sectors may be worth a closer look for recruiters in the years that follow.
The £5bn investment into expanding broadband capability may also represent an opportunity to those agencies working in the telecoms market.
There is a small additional benefit to those claiming the working from home allowance where they do not have rented office space, the allowable claim has increased from £4 to £6 per week which will benefit those individuals by £104 per annum.
Lastly while entrepreneur’s relief is retained (which is good news for any directors considering selling their agency in the near future) the lifetime allowance has been decreased from £10m to £1m which means that any value received in excess of £1m will be taxed at 20%.’
ENVIRONMENT AND ENERGY
- £120m in emergency relief for communities affected by this winter’s flooding and £200m for flood resilience
- Total investment in flood defences to be doubled to £5.2bn over next five years
- £640m “nature for climate fund” to protect natural habitats, including 30,000 hectares of new trees
‘This year we saw records broken with many floods across the UK, the Government’s plans to combat this in future years, will be good news for recruitment sectors who combat this.’
BEER, TOBACCO AND FUEL DUTY FROZEN
- Fuel duty to be frozen for the 10th consecutive year
- Duties on spirits, beer, cider and wine to be frozen
- Business rate discounts for pubs to rise from £1000 to £5,000 this year
‘Great news for recruitment agencies covering business mileage and network meetings and events. The cost of beer, cider and spirits have frozen along with fuel.’
NEED A RECRUITMENT ACCOUNTANT FOR YOUR AGENCY?
TBOS can help, we provide recruitment-specific accountancy advice and services solely to the recruitment industry. But we’re much more than recruitment accountants, we can run your complete back office for you, looking after all your placement needs be it invoicing, finance, credit control right through to your year-end accounts.
Find out more about our pay as you go solutions by giving us a call today.