Rishi Sunak delivered his first budget yesterday in difficult conditions for the economy with Covid 19 and an oil crisis causing mayhem in the markets, but he seemed to get the balance about right between saving and spending.

The main headlines are as follows that affect our clients generally.

Income Tax

The personal allowance (the amount you earn before you start paying income tax) will remain at £12,500.


The Annual Allowance (the amount you can pay into a pension each year) will remain at £40,000.

The Lifetime Allowance (LTA) will increase from £1,055,000 to £1,073,100 for 2020/21. This is the amount you can have in a pension before you are subject to a surcharge tax.

There are, however, changes to the Tapered Annual Allowance which affects clients earning over £150,000. Currently, they start losing their £40,000 Annual Allowance so that if earnings are over £210,000, they can only pay in £10,000 to pensions.

This will be extended by £90,000 so that only people earning over £240,000 will be affected. We are awaiting the fine detail, but this seems a good measure and should take out most people from this ridiculously complicated taxation.

State Pensions have increased to £175.20 per week (£9,110.40 pa)


Normal ISA subscriptions will remain at £20,000 but junior ISA’s will increase to £9,000 (from £4368) and Lifetime ISA’s will stay the same at £4,000.

Capital Gains Tax

The tax-free gain has been increased to £12,300 (from £12,000) per person.

Entrepreneurs Relief, when a person sells a qualifying business has been reduced to 10% tax on a maximum of £1M, which is down from £10M. This is back to where it started a few years ago, and at least it wasn’t abandoned, as was reported widely in the press.

Inheritance Tax (IHT)

Even though the basic rates remained the same, at £325,000 per person, the Residence Nil Rate Band will see its final increase to £175,000 per person. This means that for estates less than £2M each person will have a tax-free allowance of £500,000 and married couples or civil partners will have combined tax free estate of £1M.


If you want any clarification on any of this, please contact your adviser or the office on 01564 795997.

Phil J McGovern FPFS

12th March 2020