The new Chancellor Rishi Sunak delivered his first budget yesterday. Mr Sunak announced a raft of measures to relieve pressure on small businesses following the outbreak of the coronavirus.
Temporary abolition of business rates
Mr Sunak announced the temporary abolition of business rates. Retail, leisure and hospitality businesses with a rateable value of less than £51,000 will benefit from the cut. “That is a tax cut worth over £1bn, saving each business up to £25,000,” Mr Sunak said.
There was also good news for smaller businesses, who pay little to no business rates. The Government will provide a £3,000 grant to companies eligible for small business rates relief.
“This is a £2bn cash injection direct to 700,000 of our smallest businesses,” said the Chancellor.
Statutory sick pay
Businesses with less than 250 employees will be able to claim back the cost of statutory sick pay (SSP) to employees who have been affected by the coronavirus. Individuals advised to self-isolate will be entitled to statutory sick pay, even if they have no symptoms.
The budget did not forget about self-employed workers, who are not eligible for SSP. They will be able to claim contributory Employment Support Allowance.
Personal taxes, wages and pension
The tax threshold for national insurance contributions will rise from £8,632 to £9,500. Those earning more than £9,500 will be, on average, £85 a year better off.
Corporation tax remains at 19% and the standard rate of VAT at 20%.
5% VAT on women’s sanitary products, known as the tampon tax, to be scrapped.
The Employment allowance (EA) has increased by £1,000 to £4,000 from April 2020.
Entrepreneurs relief will remain. The lifetime allowance will be reduced by £9m to £1m.
VAT on newspapers, e-books and e-magazines will be scrapped from December. However, this will not apply to audiobooks.
The R&D expenditure credit (RDEC) rate will increase from 12% to 13% from 1 April 2020. Supporting businesses investing in research and development and helping to drive innovation in the economy.
Businesses and self-employed individuals in financial distress due to the coronavirus will also be able to defer tax payments for a certain period of time.
The van benefit charge and the car and van fuel benefit charges are increased by the Consumer Price Index from 6 April 2020. The flat-rate van benefit charge will increase to £3,490, the multiplier for the car fuel benefit multiplier will increase to £24,500, and the flat-rate van fuel benefit charge will increase to £666.
The intention of Mr Sunaks first budget was to provide a response to the coronavirus. And tackle the threat to small businesses and workers. This budget won’t cure the coronavirus or the British economy.
Mr Sunaks has announced himself to the British public. He delivered a budget that tore up the Treasury’s old rules on capital spending. Sunak has passed his first test but his next test – the autumn budget – will be even harder.
If you would like to discuss how the budget could affect your business, feel free to contact Accounting Inc.