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The Spring Budget – A Guide for Small Businesses

Following the the chancellor’s multi-billion pound budget, a number of positive announcements were made in an aim to support small businesses in the wake of COVID-19.  We break down these announcements and explain what they mean.

Statutory Sick Pay (SSP)

High on the agenda was Coronavirus. As the virus continues to spread and affect businesses up and down the country, the chancellor echoed the Prime Minister’s earlier announcements, confirming that Statutory Sick Pay (SSP) would be available to all from day one. This applies if your employees are advised to self-isolate, regardless of whether symptoms are present or those who are assisting and caring for others during a required period of self isolation.

For the self employed and those on lower earnings who would normally look to claim contributory Employment Support Allowance (ESA), the chancellor announced that claims for SSP can be made from day 1, temporarily removing the 8 day waiting period.

Furthermore he announced that employers with 250 employees or less would automatically be able to reclaim an SSP refund for up to 14 days, where staff are required to self isolate due to coronavirus related illnesses.

In review:

  • SSP temporarily becomes a Day 1 right, abolishing the 3 day waiting rule.
  • The self employed and those on lower pay will be able to access monetary support much faster via the Employment Support Allowance (ESA).
  • Minimum income requirements will be relaxed for Universal Credit applicants
  • Attendance at Job Centres will be relaxed and sick notes will available from 111
  • SSP refunds available for employers with 250 of fewer employees affected by the coronavirus.

Coronavirus Monetary Support

The chancellor has announced a £500 million pound hardship fund for local authorities to assist vulnerable people in the area affected by the virus alongside a new temporary Coronavirus Business Interruption Scheme and greater support via Time to Pay arrangements in partnership with HMRC.

In review:

  • Hardship Fund – Issued by local authorities for those who are not eligible for SSP and unable to work following the requirement to self-isolate
  • ‘Coronavirus Business Interruption Loan Scheme’ to support banks in lending to small businesses affected by the coronavirus with up to £1.2 million available to businesses complete with an 80% government guarantee
  • Time to Pay Arrangements – provided by HMRC, such arrangements provide businesses with the ability to pay tax bills off via monthly instalments over an agreed period, the chancellor announced the scheme support line would be ‘scaled up’ with an additional 2,000 staff on stand by to answer calls

Cuts to Business Rates

A welcome announcement for many small businesses was the temporary abolishment of Business Rates. Businesses operating from premises with a rateable value of £51,000 or less across an extended range of business sectors will not be required to pay anything for the 2020/2021 tax year. Whilst businesses with a rateable value below £15,000 will receive 100% relief in addition to being eligible to apply for cash grants of £3,000.

In review:

  • Business Rates Holiday for Shops, Cinemas, Music Venues , Leisure and Tourism with a rateable value below £51,000
  • £3,000 grant available for very small businesses to help with fixed costs
  • 100% Small Business Rate Relief for business with a premises with a rateable value of £15,000 or less, sliding scale temporarily abolished
  • Small Pubs Discount Business Rates Discount to increase from £1,000 to £5,000 for 20/21

Increase in National Insurance Threshold

Both employees and employers will benefit from an increase in the national insurance threshold up £868.00 from £8,632 in 2019/2020, which will go some way to offset the 6.2% minimum wage increase set for 1st April 2020.

Increase in Employment Allowance (EA)

Another boost for employers was the announcement that Employment Allowance (EA) would this year increase from £3,000 to £4,000. However new eligibility rules also come into force next month on 6th April 20, which remove blanket eligibility and restrict this to employers with less than £100,000 of Class 1 NICs liability in the prior year.

Entrepreneurs Relief – Lifetime Allowance Reduction

Whilst rumours have circulated regarding the abolishment of Entrepreneur’s Relief , the chancellor today announced that this would not be ‘sensible’ at this time. In compromise, whilst still being available to business owners, the lifetime allowance was cut by 90% from £10 million to £1 million.

Other notable mentions:

  • Plans for increase in National Living Wage (NLW) to over £10.50 per hour by 2024
  • Increase in R&D Tax Credit relief from 12% to 13%.
  • Corporation Tax remains at 19%
  • Abolishment of VAT on Digital Publications
  • Additional funding and support pledged to assist SMEs through Growth Hubs and Start Up Loans programmes.
  • Plastic Packaging charge for businesses using less than 30% recycled materials in product packaging with fees chargeable at £200 per tonne
  • Abolishment of ‘Tampon Tax’ with all sanitary products becoming VAT free from January 2021
  • Freeze on Fuel Duty, Scotch Whiskey, Wine, Beers and Ciders but not for Cigarettes which will be 27p more from Thursday 12th March 2020.
  • Abolishment of Red Diesel tax relief over a 2 year transition period for all apart from the agricultural sector, rail, domestic heating supplies and fishery.
  • From April 2022, Gas Levies will increase whilst Electricity levy charges will be frozen.
  • More locally,  the A303 received an honourable mention with plans for improvement to the infrastructure of this vital connection between the South West and the rest of the UK.

Further information on the changes announced in the budget can be found via https://www.gov.uk/government/publications/budget-2020-documents/budget-2020#annex-a-financing

 

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