Grant Wardell-Johnson, KPMG Lead Tax Partner responds to Budget 2020
Overall this is a Budget with plenty of useful and targeted measures but the government looks to have opted for measures which are relatively easily implementable and can get through Parliament. There is not so much that will set in play longer-term structural reform. It is about jobs in the short to medium term.
As expected Stage 2 of the income tax cuts has been brought forward but not stage 3, which is not only an acceptance of political realities, but it will put more money in the pockets of those who will spend it, which is sensible. The temporary full expensing for most businesses will help with the costs of purchasing capital equipment but is a short term timing advantage rather than the bigger costs to the public purse which an investment allowance would have required.
I particularly like the loss carry-back rules which will benefit businesses which are operating well during this crisis and deserve support. Governments have resisted introducing this over many years as it has a significant cost. It would be ideal if the carryback went back further than 2019 but it is still a very substantial act of assistance to companies which have made profits in previous years but have been battling through the COVID-19 era.
The JobMaker and apprenticeships proposals aimed at helping young people in the crisis are also welcome.
At a deeper level we face a paradox, that a crisis situation needs fundamental reform but it is also a difficult environment to achieve that reform in. The government seems to have accepted that and gone for the possible, but we need to set in train a process to consider our longer term future.