This week, Chancellor Rishi Sunak delivered his first budget. In this post, we’ll recap the key points for small and medium-sized businesses.
Measures to Reduce the Impact of Coronavirus
The chancellor announced several measures to help businesses cope with the fallout from Coronavirus.
A temporary Coronavirus Business Interruption Loan Scheme supporting loans of up to £1.2 million in value will be delivered by the British Business Bank. This is designed to support businesses in accessing bank lending and overdrafts. The government will provide lenders with a guarantee of 80% on each loan (subject to a per lender cap on claims) to give lenders further confidence in continuing to provide finance to SMEs.
A £2.2 billion fund for Local Authorities in England will provide £3,000 to each of the approximately 700,000 businesses currently eligible for Small Business Rate Relief (SBRR) or Rural Rate Relief. This is designed to help them meet their ongoing business costs.
Business rates will be scrapped this year for firms in the retail, leisure and hospitality sectors with a rateable value below £51,000.
HMRC has set up a dedicated COVID-19 helpline to help those in need, and they may be able to agree a bespoke Time to Pay arrangement. HMRC have made a further 2,000 experienced call handlers available to support firms when needed.
The government will fund Statutory Sick Pay for businesses with fewer than 250 employees for two weeks. It will be payable from day one, rather than day four as it is at the moment. It will cover those advised to self-isolate, and those caring for others who self-isolate.
National Insurance Changes
The National Insurance threshold will be raised from £8,632 to £9,500 from April.
The Employment Allowance will be increased from £3,000 to £4,000, benefiting 510,000 businesses. The allowance reduces an employer’s (secondary) Class 1 National Insurance each time payroll is run until the allowance has gone or the tax year ends (whichever is sooner).
Access to Advice and Support
The government will invest £10 million to increase Growth Hub capacity and provide high‑quality, core business advice and guidance across all 38 Growth Hubs.
The government will invest up to an additional £5 million in Be the Business, a not-for-profit movement designed to help small businesses improve their productivity. The investment will enable it to expand its national productivity campaign and further develop its digital tools and resources.
Promoting Research and Innovation
The government set an objective of increasing economy-wide investment in R&D to 2.4% of GDP by 2027. To support this, there are changes to Research & Development Expenditure Credits, which allow companies to get Corporation Tax relief on their research and development costs. The rate will increase from 12% to 13%. The government will also consult on whether qualifying R&D tax credit costs should include investments in data and cloud computing.
The government will also provide the British Business Bank with the resources to make up to £200 million of additional investment in UK venture capital and growth finance in 2020-21.
There will be reforms to limit Entrepreneurs’ Relief, which allows business owners to pay less Capital Gains Tax when they sell all or part of their business.
Changes to VAT
From 1 January 2021 postponed accounting for VAT will apply to all imports of goods, including from the EU. This has been designed to help VAT-registered UK businesses that are integrated in international supply chains adapt to the UK’s position post-Brexit.
Investment in Infrastructure
Around £640 billion of gross capital investment will be provided for roads, railways, communications, schools, hospitals and power networks across the UK by 2024-25. This includes £4.2 billion for five-year, integrated transport settlements for eight city regions and £1 billion allocated to starting work on transport schemes.
The investment aims to support the government’s commitment to ‘levelling up’ across the UK by raising productivity and growth in all nations and regions.
For full details on all the announcements, visit Budget 2020 on the gov.uk website.