The Chancellor of the Exchequer announced his Budget for the coming year today.
Whatever your politics, today’s Budget has been one of the most generous budgets for years, and has some genuinely helpful rewards and benefits for many small businesses.
As usual, many of the announcements focused on areas outside of the trading world – with many specifically designed to tackle the Coronavirus outbreak – but below we have pulled out and summarised those most likely to affect you and your business.
Tax rates, duties and interest rates
- The personal tax allowance – the amount you can earn before you have to pay tax – remains at £12,500 and the higher rate threshold – the amount at which people start to pay the higher income tax rate of 40% – stays at £50,000.
- The threshold for paying national insurance contributions will rise to £9,500 from £8,632.
- The plan to reduce corporation tax to 17% has been scrapped and it remains at 19%.
- Entrepreneurs Relief – a relief for business owners selling their businesses – has seen the total gain they can claim relief on over their lifetime fall from £10m to just £1m.
- Interest rates have been cut from 0.75% to 0.25% with immediate effect.
- The Bank of England has freed up billions of extra lending power so that Banks have more funds to lend growing or struggling firms.
- Fuel Duty is frozen for another year
- VAT on digital books, newspapers, magazines and academic journals will be scrapped from 1 December.
- The 5% VAT on women’s sanitary products is scrapped altogether.
Business Rates
- Business rates for shops and cafes have been suspended. If the rateable value of its premises is less than £51,000 then the business will not have to pay rates at all this year, and it applies to shops, cinema, restaurants and hotels.
- It will also benefit museums, art galleries, theatres, caravan parks, gyms, small hotels, sports clubs and night clubs, all of whom will be hard hit if customers stay away to slow the spread of coronavirus.
- However, many businesses in higher value properties – particularly those in London – will not receive the benefit as their rateable value is above the £51k threshold. Businesses falling into that category have already complained that a business with a £49k rateable value would get a full discount, whereas those at £59k would get none.
- The business rates system will as a whole be reviewed, with the findings expected in the Autumn, which is being seen as a victory for campaigners believing that physical retailers are at a disadvantage to their online rivals.
- Cash grants of £3,000 will be available for the smallest businesses with rateable values below £15k
Sick pay
- Businesses with fewer than 250 employees can reclaim the full cost of any Statutory Sick Pay (SSP) incurred for employees off because of the coronavirus.
- SSP will be paid to all those who are advised by Doctors to self-isolate, even if they are not displaying symptoms.
HMRC
- Whilst the coronavirus continues HMRC will be more flexible with their time to pay service so businesses can defer tax payments of necessary.
Further details on the points above and the rest of the Budget can be found here.