The March 2020 Budget has now been announced by Rishi Sunak. With it being made obvious that there are two parts to it.
Part 1 of the budget dealt with Coronavirus, and how the government intends to support small and medium size businesses through the challenging times ahead.
It has been estimated that the disruption could cost the government £30bn!
Part 2 of the budget was the typical one but with a big difference – it’s the biggest spending spree announced in nearly 30 years. So plenty to talk about.
For now, we’ll keep this email quite short and start getting the detail into blogs over the next few weeks.
Part 1 (Coronavirus specific measures) –
- Coronavirus will affect the economy. From the Chancellor – “There’s likely to be 20% of the workforce off at once… For a period, our productive capacity will shrink, and consumer spending will reduce… But the drop will only be temporary.”
- The Government has been speaking with the Bank of England and have helped to arrange a 0.5% drop in interest rates to 0.25%.
- Statutory Sick Pay (SSP) is to be paid from Day 1 rather than Day 4. SSP will be available for all people who are told to self-isolate. SSP being given to self-employed from Day 1 too, if they don’t qualify, they can claim Employment Support Allowance. Everything will be able to be done online or by phone, without going to the job centre.
- Normally SSP is paid by employers. However, it is to be paid by the government for 14 days for all businesses who have less than 250 staff with staff off suffering from Coronavirus.
- There is a new dedicated HMRC helpline with 2,000 staff for businesses to make payment plans when they’ve been affected by Coronavirus. You can get the details here.
- There is a £500m loan scheme to cover business disruption for Coronavirus. It’s government backed up to 80% of any losses, limiting them on the banks.
Part 2 of the 2020 budget had the following main points –
- Business Rates – £1billion cut for business…. There’ll be no rates for a year for the retail, leisure and hospitality sectors if your rateable value is under £51,000.
- For businesses who qualify for small business rate relief, there’s going to be a £3,000 cash credit paid to them.
- There is to be an increase in the minimum wage of 6.2% from April 2020. Today they announced a formal target of aiming the minimum wage to be 2/3rds of median earnings – which is about £10.50 / hour by 2024. How will that affect your business?
- The NI threshold is increasing from £8,632 to £9,500 which will give a tax cut of £100. Income tax rates and bands look to be staying the same as the current year for 2020-21.
- Pubs will have a £5,000 discount on their rates bill if they’re not covered by the exemption above and the rateable value is under £100k.
- Entrepreneurs Relief is the 10% tax rate available to business owners exiting their business. There was talk of this being removed altogether, but instead there has been a reduction of lifetime limit from £10m to £1m. Which is great news for most small business owners.
- Employment allowance is rising to £4,000 from £3,000.
- There’s no further cut for corporation tax – it’s staying at 19%.
- IR35 wasn’t mentioned, but I’ve looked in the policy document and there’s no movement. The changes which contractors are expecting next month are being implemented.
- Additional powers have been given to HMRC. They are trying to collect £4.4bn extra over the next 4 years.
Don’t forget to look out for our blogs over the next few weeks.