March 13, 2020 Industry news
The annual Budget is particularly important for the UK’s small-to-medium enterprises (SMEs), that account for 99.9 per cent of the UK’s business population, 60 per cent of its workforce and half of all the UK’s private sector turnover.
Unsurprisingly, the 2020 edition has been dominated by effects on the economy of the COVID-19 virus and the potential disruption that that could cause. In this regard, SMEs and the self-employed will benefit from the following support from government:
Business rates abolished for a year
Business rates in England will be eliminated for 2020-21 for firms in the retail, leisure and hospitality sectors working out of properties with rateable values below £51,000. The Business Rates retail discount will increase to 100 per cent for the same timeframe. SMEs that do not pay business rates will receive a £3,000 cash grant in relief.
Emergency tax deferments
SMEs affected by COVID-19 that might not be able to meet their tax obligations on time, can apply to HMRC for a deferral period. A helpline will be set up by HMRC and bolstered by an extra 2,000 staff to deal with any issues that may arise.
You can call the HMRC Coronavirus Hotline from Monday–Friday between 8am–8pm, and on Saturday between 8am–4pm on 0800 015 9559.
Coronavirus Business Interruption Loan Scheme instated
The British Business Bank, a state-owned entity established by the UK Government to increase the supply of credit to SMEs, will make an additional £1bn available to offer existing support. This will temporarily replace the Bank’s Enterprise Finance Guarantee scheme. For more detail, see here.
Statutory Sick Pay refund
Businesses employing fewer than 250 staff will receive refunds of Statutory Sick Pay (SSP) payments related to COVID-19. Absences will have to be documented but employees will not have to provide a doctor’s note. The refund will be capped at 14 days per staff member, and a mechanism for repayment will be put in place by HMRC over the coming months.
Measures for the self-employed
For the millions of self-employed and gig-economy workers in the UK, the following provisions have been made for those infected with COVID-19 or self-isolating:
- The Employment and Support Allowance will be paid from day one of registered sickness, not day eight
- Those claiming Universal Credit will not have to go to a Jobcentre to access payments
- The requirements of the minimum income floor in Universal Credit will be temporarily relaxed for the duration of the outbreak
Although coronavirus played a starring role in the chancellor’s Budget speech, there were several other pertinent developments from an SME perspective:
Extra support for start-ups and scale-ups
An additional £130m of funding has been allotted to the Start Up Loans Scheme and the British Business Bank has been given an investment increase of £200m to support companies looking to jump to the next step in their development.
Post-Brexit exporting boosted
UK Export Finance (Ukef), the Government’s export credit agency will see an injection of £5bn to bolster overseas trading. This represents the single largest cash boost for Ukef, which now commands a pot of £8bn.
Entrepreneurs’ Relief reformed
Formerly, the controversial scheme allowed businesses owners to pay Capital Gains Tax at a rate of 10 per cent, rather than the standard 20 per cent, up to a lifetime allowance of £10m. This has now been slashed by 90 per cent, to a capped ceiling of £1m.
Broadband gets a boost….by 2025
The chancellor reaffirmed the Government’s pledge to the rollout of gigabit-capable broadband across rural areas of the UK over the next five years.
Employment Allowance hike
The Employment Allowance will be increased from £3,000 to £4,000, meaning firms will not have to pay National Insurance Contributions (NICs) on the first £4,000 of their annual obligations.
National Insurance threshold increased
In April 2020, the primary threshold and lower profits limit for the self-employed will increase to £9,500 from the current £8,632. This will equate to a saving of around £78 in 2020–21. The rise represents a first movement in the Conservative government’s manifesto pledge to raise the ceiling to £12,500.