The Chancellor Rishi Sunak delivered his first Budget on 11th March 2020. It was against the backdrop of the development of the Coronavirus, which has turned into a pandemic and is potentially going to have a huge impact on the fabric of society over the coming months. For this reason, there were some business friendly announcements (and the Budget followed a cut in the Bank of England base rate, from 0.75% to 0.25%). The following are the main points which affect small businesses.
The Employment Allowance is currently £3,000 that reduces an employer’s National Insurance Contributions. This will increase to £4,000 from 1 April 2020.
Statutory Sick Pay
A number of measures have been introduced to Statutory Sick Pay (SSP) which are effective from 6 April 2020. The measures include:
- All employees who self-isolate will be able to claim SSP
- As a temporary measure SSP claims can be made from day 1 rather than day 4
- Employees who are caring for someone who is self-isolating will also be able to claim SSP on this basis
- Businesses with less than 250 employees as at 28 February 2020 will be able to reclaim SSP expenditure up to a maximum of two weeks per employee from the Government. This measure will commence from the date the new regulations for SSP are announced.
The current rate of SSP is £94.25 per week, rising to £95.85 from 6 April 2020.
SSP is currently payable to employees with earnings over £6,136 (£6,420 per annum from 6 April 2020). For employees below this threshold, as well as the self-employed, the Government has announced additional measures that include:
- The ‘New style’ Employment and Support Allowance will be payable for people directly affected by Coronavirus or self-isolating according to government advice from the first day of sickness
- People will be able to claim Universal Credit and access advance payments where they are directly affected by Coronavirus, or self-isolating, without the current requirement to attend a Jobcentre
- For the duration of the outbreak, the requirements of the minimum income floor in Universal Credit will be temporarily relaxed for those directly affected by Coronavirus or self-isolating ensuring self‑employed claimants will be compensated for losses in income
Business Rates Relief
To help businesses cope with the commercial impact of Coronavirus, business rates reliefs for businesses in England have been confirmed and extended. As a result, some businesses will have a reduced business rates liability or no liability at all, for the year to 31 March 2021.
It had previously been announced that there would be an increase in rates relief to 50% for the year to 31 March 2021 for those retailers in England with a rateable value below £51,000. This was expected to apply to up to 90% of independent shops, pubs and restaurants. The relief has now been increased to 100% and the scope of the relief has been expanded to include cinemas, music venues and leisure and hospitality businesses. This means that qualifying businesses will have no liability to business rates for the year to 31 March 2021.
Pubs in England with a rateable value below £100,000 will receive a rates discount of £5,000, (increased from £1,000), for the year to 31 March 2021.
One-Off Grant for Small Businesses
If a business currently qualifies for the Small Business Rates Relief, the Government is to provide a £3,000 grant. Businesses that think they may be eligible should contact their local authority.
The personal allowance and the income tax bands have been maintained at the same level for the 2020-21 tax year as for the previous year, 2019-20:
Personal allowance £12,500
Basic rate band £37,500
Higher rate band £37,501 to £150,000
Additional rate Income over £150,000
The tax threshold for National Insurance Contributions will rise, from ££8,632 to £9,500.
Capital Gains Tax
In respect of your home, there is usually no Capital Gains Tax (CGT) to pay on disposal. If you let out your home (as well as live there yourself), then you may be subject to CGT. Effective from April 2020, there are 2 changes to the current rules in respect of this:
- The final exemption period is being reduced from 18 months to 9 months.
- Lettings relief – a big concession which often helped to avoid CGT – is being reformed so that it only applies in situations where the property owner is sharing the occupancy with the tenant.
Also, before the Budget, there was a lot of speculation in respect of whether Entrepreneur’s Relief (a relief available to business owners which limits CGT payable on disposal of the business) may be scrapped. The announcement was that it was being retained, but the lifetime allowance for the relief would reduce from £10m to £1m.