What does the Budget mean for my business?
Rishi Sunak has unveiled his first Budget as Chancellor, but what does it mean for your business? We’ve summarised the key points affecting UK businesses in the April 2020 Budget.
Support for businesses affected by Coronavirus
Whilst the health and social impact of coronavirus is obvious, the effects of a workforce absent en masse, along with reduced production, orders, and sales is likely to hit businesses hard,
The government has responded to the financial threat posed to smaller businesses by COVID-19 Coronavirus with a series of measures.
The steps include financial support for those facing lost income due to isolation measures. It encourages those who may be unwell to stay home, rather than risking further spread of the virus.
- Those who are advised to self-isolate will be paid Statutory Sick Pay, whether or not they have been diagnosed, or even exhibited symptoms. SSP will also be paid from the first day of the absence, rather than the current three-day rule.
- Self-employed workers aren’t being overlooked either. Employment Support Allowance (ESA), a benefit for those unable to work due to sickness or injury, will be accessible to those affected by COVID-19 from day one, rather than day seven.
- Smaller businesses who employ fewer than 250 staff will receive funding for sick pay payments up to two weeks.
To help curb the spread of the virus, many public events are being cancelled which unfortunately presents problems for those reliant on them as a source of income.
With this in mind, the Chancellor announced that business rates for retail, leisure and hospitality firms would be abolished in England.
The Budget also sets out a response aimed at other businesses likely to be affected by Coronavirus, offering business interruption loans of up to £1.2 million.
National Insurance changes for employers and earners
The government also put forward proposals designed to encourage employment by giving employers more attractive National Insurance allowances.
- Previously capped at £3,000 the Employment Allowance will now give eligible employers up to £4,000 off their National Insurance bill each year.
- A one year ‘holiday’ on employer’s NI is also offered in the first year of employment – eligible for employers who take on veterans.
The new Chancellor’s budget also addresses NI for earners, increasing the threshold from £8,632 to £9,500.
Tax overhauled for entrepreneurs
Entrepreneurs disposing of some or all of their businesses have previously enjoyed a reduced rate of Capital Gains Tax at 10%. Known as Entrepreneur’s Relief, it was designed to encourage more people to launch their own business, but it was described by Sunak as ineffective.
Rather than scrap the scheme as some were calling for, the Chancellor instead announced plans to reduce the maximum amount of relief allowed from £10m to £1m.
VAT on digital publications scrapped
As of December 2020, VAT will no longer be charged for digital publications such as newspapers or books. It’s great news for consumers, as well as for businesses whose VAT bill is incurred by the sale of digital products. It will certainly make it easier to sell digital services in the UK from inside and outside the UK.
Combatting climate change through business
Sustainable business has been on the radar for a while, driven by consumer demand as much as government regulation. The spring 2020 Budget introduces further measures designed to combat climate change and protect the environment.
- A Plastic Packaging Tax will be enforced starting April 2022, designed to “tackle the scourge of plastic wage”. The tax will see manufacturers and importers charged £200 per tonne on products made with less than 30% recycled plastic.
- To help the UK reach its ‘net zero’ target in 2050, Sunak also announced that the red diesel subsidy would be scrapped for most industries within two years. The agricultural and rail sectors will retain their subsidies.
UK infrastructure will receive considerable funding, improving areas such as communications and the road network. This is good news for business owners who rely heavily on these for customer accessibility and logistics.
- High speed broadband internet will receive £5bn in order to extend its reach into remote and hard-to reach areas.
- The road network will also have money spent on it, with £27bn being made available for motorways and other key roads. A further £2.5bn will be available for road resurfacing and pothole repairs over the next five years.
For more information designed to help you in your business, check out our resources hub, or use the Live Chat button screen to find out more.