Post-Budget 2020: Reflection and implications for small business owners
Posted on 19th March 2020
Last week, the Chancellor Rishi Sunak announced the Budget for 2020; you can read more about what was covered here. You may be unsure what the outcome of the Budget means to you as a business owner. It has only been a few days since it was announced, and especially with the coverage of the coronavirus pandemic taking up so much space in the news and undoubtedly in our heads as well, you're likely feeling uncertain and unsure about what lies ahead. During the Budget announcement Sunak warned that up to 20% of the working population could be off work with coronavirus or indeed self-isolating in order to reduce their chance of catching the illness, which will disrupt the economy.
We'd like to make sure you feel supported and have as much knowledge as possible during this difficult time, so as always, do reach out to the team if you have any questions, worries or comments, and we'll do our best to help you.
Coronavirus support in place for SMEs
You may have seen our blog post from earlier this week in which we outlined the temporary measures for the self-employed affected by COVID-19. If not, it's here - please make sure you make yourself familiar with all the information in the blog. It will be your responsibility to reach out for financial assistance during this time, if required.
Business owners will be able to apply for a statutory sick pay relief package for during the pandemic. Business Rate Relief will be available for small businesses and pubs which will also be extended to the leisure and hospitality sectors, small businesses will receive a grant funding of £3,000 if they are in receipt of Small Business Rates Relief (SBRR) and Rural Rates Relief, and finally a coronavirus business interruption loan will be granted to support long-term viable businesses who may need to respond to cash-flow pressures by seeking additional finance.
The help is out there, and we can help you access it - but you do need to ensure you keep yourself informed of all the available options.
Business rates to be temporarily scrapped for smaller firms in retail, leisure & hospitality sectors
If you run a business in the retail, leisure or hospitality sector and your business premises has a rateable value of up to £51,000, your business rates will be aboloshed all together until the end of the year. Mike Cherry, national chairman of the Federation of Small Businesses, said: “Suspending business rates for small high street firms is a huge bonus for our town centres and high streets. Together with extra cash for those that already qualify for small business relief, this shows a real commitment to supporting small businesses at the heart of communities."
In the meantime, small businesses that pay no business rates will be eligible for a grant of £3,000 in an attempt to create a 'safety net' for SMEs. We are yet to receive details regarding how business owners can access the cash injection, but we are expecting (and hoping) the government takes swift action sooner rather than later. As soon as we know, we will update this blog with details and send an email out to clients.
Good news - rather unexpectedly - for those who worried about Entrepreneurs' Relief
We weren't sure what the news would be regarding Entrepreneurs' Relief but luckily, the Chancellor announced a 90% cut to the lifetime limit - reduced from £10 million to £1 million - to save £6 billion over five years. Mike Cherry said: "The sensible compromise on Entrepreneurs’ Relief is one that we have proposed and championed, and everyday entrepreneurs will be pleased to hear the Chancellor say that he has listened to FSB on this.”
We think - and hope - that this development will enable businesses to plan long term investment strategies while also assuring investors that the UK is as supportive of new businesses as ever.
31 million people will benefit from NI threshold rising from £8,632 to £9,500...
...as well as those who will benefit from the National Living Wage be raised to over £10.50 an hour by 2024.
Unfortunately though, the previously planned cut in corporation tax is now not going to go ahead, so it will remain at 19%. It had been previously announced that it would reduce from 19% to 18% from April 2020, but this is no more. This shouldn't affect business owners too much as you'll already be used to paying the 19% - and it was only a small cut anyway. We know that every little helps, but it isn't the worst news to hit us.
Need urgent advice from us? Book a call
We understand that this is an uncertain this time for you as a business owner, and we are here if you need to speak to us. If you're a client of ours and you need urgent financial advice, please do not hesitate to book a call here. If you're not a client but you're looking to speak to us for financial advice or anything else, please use this link.
We can also help if you're a contractor who will be hit by the IR35 reforms which are confirmed to be going ahead next month - simply book a call with us here and we will help you figure out the best course of action for you.
Written by
Nicola J Sorrell -
Effective Accounting
Founder | Xero Champion | IR35 Expert
Tagged as: Budget & Tax Rates, Coronavirus
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