As the new Chancellor Rishi Sunak approached the despatch box to deliver the 2020 Budget, few knew what he had in store for business.
Between big headline announcements, including a £30 billion financial package to support the UK throughout the coronavirus pandemic and confirming that the Bank of England (BoE) had cut interest rates to a record low 0.25 per cent, one measure in particular stuck out.
From today, the business rates retail discount will be increased to 100 per cent relief for the remainder of the year, while the scope of the discount will be extended to hospitality and leisure businesses.
In this blog, we’re going to look at what the retail discount is, and what the extended scheme means for businesses.
What is the retail discount?
First announced in Budget 2018, the retail discount is a measure designed to ease the burden of business rates on small businesses.
Under the scheme, shops, restaurants, cafes, pubs and bars with a rateable value of less than £51,000 are eligible to receive one-third off their business rates bill, on top of any other business rates relief you’re entitled to.
This year, it was revealed that the retail discount would be extended to 2020/21.
As confirmed in today’s announcement, the retail discount will be upgraded from a one-third discount to 100 per cent relief, meaning qualifying businesses will pay nothing for the remainder of the year.
Chancellor Rishi Sunak also revealed that the scheme will be extended to even more business premises, including “museums, art galleries, and theatres; caravan parks and gyms; small hotels and B&Bs; sports clubs, night clubs; clubhouses and guest houses.”
“They would not benefit from today’s measure – but they could be some of the hardest-hit,” said the Chancellor. “So, for this year, I have decided to extend the 100 per cent retail discount to them as well.”
“That means any eligible retail, leisure or hospitality business with a rateable value below £51,000 will, over the next financial year, pay no business rates whatsoever.”
According to the Treasury, the tax cut is worth over £1 billion, saving businesses “up to £25,000” each.
What else did I miss?
The supercharged retail discount isn’t the only measure that caught our eyes. While our full Budget 2020 summary will be available to view online soon, these are the other important changes you need to know about:
Coronavirus loan scheme: a new finance scheme covering the cost of salaries and bills to support small and medium-sized enterprises.
Statutory Sick Pay (SSP): Government will fund SSP for two weeks for businesses with fewer than 250 employees to encourage self-isolation.
Small business rates relief grant: a £3,000 cash grant per business for any firm that is currently eligible for the small business rates relief.
National Insurance Threshold: the threshold will be raised from £8,632 to £9,500 from April 2020.
Entrepreneurs’ Relief: Suspicions that the scheme will be scrapped have been dismissed, but the lifetime allowance will be reduced from £10 million to £1 million.
About Andrew Price
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