Spring 2020 Budget – how will your business be affected?

Yesterday, the Chancellor announced the Conservative’s spring 2020 budget. Large spending commitments were made, including emergency funding to combat the coronavirus outbreak, plans to reduce homelessness and promises to fix the many, many potholes on our roads.

At the centre of the budget, however, were those plans focussed on the UK’s SMEs, and Adam Dowdney, Partner leading IBB’s Corporate & Commercial team, has summarised those proposals which business owners, directors and shareholders should be aware of:

Entrepreneurs’ relief

After months of speculation that this might disappear entirely, the Chancellor confirmed this relief will remain in place, but the lifetime allowance for an individual will be reduced from £10 million to £1 million.

Business rates tax holiday

For all small businesses (i.e. those with a rateable value below £51,000) in the retail, leisure and hospitality sectors, business rates have been 100% discounted for the coming year and business rates for pubs will also be discounted by £5,000 for the year, up from £1,000. The tax holiday will affect businesses such as:

• shops and restaurants;
• cinemas, music venues and night clubs;
• museums, art galleries and theatres;
• caravan parks, gyms and sports clubs; and
• small hotels, B&Bs and guest houses.

Business interruption loans

Loans of up to £1.2 million, guaranteed by the government (i.e. taxpayers), will be made available to any SME which incurs the costs of business interruption, caused by the coronavirus outbreak.

Statutory Sick Pay (SSP) and Employment Support Allowance (ESA)

For those businesses with fewer than 250 employees, the government has promised to refund the cost of up to 2 weeks’ SSP for each employee who self-isolates or contracts coronavirus. For the self-employed, the minimum income barrier for ESA will be temporarily removed to allow access to benefits from day 1 of sickness/self-isolation, as opposed to the normal 1 week.

Cash grants

A £3,000 cash grant has been promised to each small business that is currently eligible for small business rates relief (of which there are about 700,000 in the UK).

National Insurance

From April 2020, the National Insurance threshold will increase from £8,632 to £9,500.

Diesel tax relief

The diesel tax relief enjoyed by companies in some sectors (particularly agriculture), whereby a duty of only just over 11p is paid per litre instead of the almost 58p per litre paid by consumers and other businesses, will be abolished.

High street business rates review

The Chancellor has committed to a review of the entire system later this year.

VAT

Other than the abolition of the “tampon tax”, the only other mention of VAT was to scrap the tax on digital publications, newspapers, e-books and academic journals, from 1 December 2020.

Recyclable materials

In a drive towards achieving ambitious green targets, manufacturers and importers of products which have less than 30% recyclable material will be charged £200 per tonne.

Contact our corporate and commercial experts today

Our team of experts can provide advice and guidance on how the budget announcements may affect your business. If you have plans to sell, expand, buy or invest in a business, contact our expert Corporate & Commercial solicitors at corporate@ibblaw.co.uk or call us on 01895 207264