UPDATED: Chancellor Rishi Sunak has announced a £30bn spending package to help mitigate the impact of the coronavirus outbreak.
Government to cover statutory sick pay for SMEs
Statutory sick pay will be available to all those advised to self-isolate from the virus. The government will refund the cost of statutory sick pay for up to 14 days to small- and medium-sized businesses at a cost of £2bn. This will apply to businesses with fewer than 250 employees.
Announcing his Budget this afternoon, the chancellor acknowledged coronavirus would cause “temporary disruption” to the economy.
Jonathan Richards, CEO and founder of Breathe, added: “As a small business owner, it’s reassuring that the government will cover the strain caused by sick pay, as well as offering significant loans and cash injections to UK small businesses.
Coronavirus Business Interruption Loan Scheme
A “Coronavirus Business Interruption Loan Scheme” will support up to a further £1bn lending to smaller businesses. The government will guarantee bank loans to small businesses on amounts of up to £1.2m. The government will cover bank losses of up to 80pc.
Business rates to be scrapped for certain businesses…
Business rates will be abolished altogether for smaller firms in retail, leisure and hospitality – a tax cut worth up to £1bn. The scrappage will only apply to premises with a rateable value of up to £51,000 to help cushion the blow from decreased demand until end-2020.
Richards added: “Many small and medium sized businesses valued under £51,000 in the retail and leisure sector will also welcome the abolition of business rates until the end of the year. These measures take the pressures off businesses and allow them to continue as normal throughout the disruption.”
Mike Cherry, national chairman of the Federation of Small Businesses (FSB), said: “Suspending business rates for small high street firms is a huge bonus for our town centres and high streets. Together with extra cash for those that already qualify for small business relief, this shows a real commitment to supporting small businesses at the heart of communities.
Niels Turfboer, managing director of fintech lender Spotcap, said: “Temporarily abolishing business rates for firms with a rateable value below £51,000, as well as supporting companies with employees’ sick pay and increasing the employment allowance, are all steps in the right direction and should take some weight off the shoulders of small and medium-sized businesses in the UK.”
Richard Godmon, tax partner at accountancy firm, Menzies LLP, said: “Suspending business rates for the retail, hospitality and leisure businesses this year will mean that businesses with properties with a rateable value of less than £51,000 per annum will see their business rates bill drop by a third.
…other small businesses to receive cash grant
Small businesses that pay no business rates will receive a £3,000 cash grant, worth a total of £3bn.
Paul Galligan, chief executive of Bionic, said: “The temporary abolishment of business rates for specific sectors and a £3,000 cash injection for small businesses across the country will create a much-needed safety net for hard-working SMEs up and down the country. It remains to be seen how quickly businesses can access the cash injection and be repaid having claimed compensation for sick pay. It is vital that government services are swift. Overall, though, SMEs needed a turbo-charged response to the crisis, and it looks like they’ve got it.”
Entrepreneurs’ Relief to be scaled back
The chancellor also announced a 90 per cent cut in entrepreneurs’ tax relief, which costs £3bn a year, which will be recycled into other corporate tax cuts. To get small business reaction, go here.
Cherry said: “The sensible compromise on entrepreneurs’ relief is one that we have proposed and championed, and everyday entrepreneurs will be pleased to hear the Chancellor say that he has listened to FSB on this.”
£130m of new funding to extend start-up loans
As well as £5 billion of new export loans for businesses.
£200m in new funding for British Business Bank to invest in scale-ups
Businesses given HMRC tax payment extension
The Government’s Time to Pay service will be scaled up, allowing businesses and the self-employed to defer tax payments.
Godmon added: ”Scaling-up time to pay arrangements will also create greater leg room for businesses concerned about cash flow pressure due to the impact of workers’ inability to attend work and supply shortages.”
Hello and welcome to SmallBusiness.co.uk’s live coverage of today’s Budget, which we will update as a live blog as chancellor Rishi Sunak makes announcements that directly effect the 5.9m small business owners in Britain. We will have follow-up analysis and reaction from sector experts and trade associations as the implications of today’s Budget become clear.
13:29: Scrapping VAT for digital publications from December 1, including books and newspapers.
13:26: £5bn to provide to gigabit broadband into remote areas of the country. Over £27bn of new road building and a separate fund to fill 50m potholes in roads. Sunak calls it “the biggest programme of public investment, ever”.
13:21: Total of £600bn invested in future prosperity, tripling the amount available for infrastructure investment.
13:19: Government to make £120m available to repair all flood defences damage in winter floods. And another £200m will be released to local communities to build up flood defences for shops and homes.
13:14: Entrepreneurs’ relief to be reduced being allowed on first £10m of CGT to £1m, leaving 80 per cent of entrepreneurs who want to sell their businesses unaffected. “Entrepreneurs’ relief is expensive costing over £2bn a year,” said Sunak, “ineffective and unfair with nearly three quarters of cost going to 5,000 individuals.”
- Sunak also announced £ 130m of new funding for business loans and a £200m of additional funding for the British Business Bank to invest in scale-ups
- R&D tax credit to be increased from 12 per cent to 15 per cent
- Employment allowance to be increased by one third
13:04: National insurance threshold to be raised to £9,500 from £8,632, providing a tax cut for 31m people. And the National Living Wage to be raised to over £10.50 an hour.
12:59: Chancellor Rishi Sunak announces £7bn support package for small businesses including tax cuts, loans and grants for small businesses, including a coronavirus business interruption loan scheme offering loans of up to £2m to small businesses, unlocking up to £1bn of capital for SMEs.
Shops, restaurants and cinemas particularly vulnerable to coronvirus will have business rates abolished, while other leisure and hospitality businesses with a rateable value of less than £51,000 will have the existing retail discount extended. Nearly half of all business properties in England will not pay business rates.
Meanwhile, the government will pick up the bill for providing statutory sick pay for up to 14 days, providing over £2bn of cover for over 2m businesses. Statutory sick pay will be offered from day one (as opposed from day four) for all those all those advised to self-isolate even if they haven’t shown symptoms. The government will also make it quicker to access benefits for the self-employed, enabling them to claim from day one instead of day eight, and temporarily removing the minimum income floor from universal tax credit.
And HMRC will accept deferred corporation tax payments over pre-agreed periods of time.
Sunak warned that up to 20 per cent of the working population could be off work with coronavirus, which will temporarily disrupt the economy. “We will get through this together … we will rise to this challenge,” said Sunak referring to coronavirus.