Whilst the Budget was dominated by the announcement of a multi-billion pound economic stimulus to deal with the economic impact of Covid-19, a whole range of other spending and tax measures (some with immediate effect and others subject to consultation) were announced. Going with the spirit of the times, the Budget also had a noticeable green tint. 

Key tax measures

It was announced that the following measures would be included in the Finance Bill 2020 which is expected to be published on 19 March 2020:

• the UK corporation tax rate will remain 19%
• a digital services tax, set at a rate of 2%, will be introduced with effect from 1 April 2020. Zoe Andrews previously wrote about the draft legislation that was published in July 2019
•  the corporate capital loss restriction referred to in my earlier blog will be introduced with effect from 1 April 2020
• the lifetime limit on gains eligible for entrepreneurs' relief will be reduced from GBP 10m to GBP 1m

Funds and financial services

The Budget has announced that it will review the UK funds regime and create an industry working group on the future of VAT and financial services. A consultation on the tax treatment of asset holding companies in alternative fund structures has already been published; responses are due by 19 May 2020. 

The government also intends to consult on the tax impact of the withdrawal of the London Interbank Offered Rate (LIBOR) with the aim of ensuring that tax legislation referencing this rate works effectively.

Anti-avoidance

As no Budget would be complete without anti-avoidance measures, the government announced, amongst others, that it will discuss limiting access to government awards and authorisations to businesses that are able to demonstrate good tax compliance and, from 2021, large businesses will be required to notify the UK tax authorities if they take a tax position likely to be challenged. Costings indicate that the latter measure is expected to raise an additional GBP 45 million per year by 2024.

Green budget

The Budget announced a range of measures, ranging from additional investment in research and development to a rebalancing of climate change levy rates, to enable the UK to reach the target of net zero greenhouse gas emissions by 2050. 

Finance Bill 2020 will include legislation to pave the way for: 

• a plastic packaging tax which is to take effect from April 2022. Alongside the Budget, the government has published a consultation on the policy design. The due date for responses is 20 May 2020
• a UK emissions trading system which "could be linked to the EU ETS". A consultation on the design of the UK ETS is to be published in spring 2020

The government also intends to consult on the reform of air passenger duty and the introduction of a green gas levy.