In his first Budget as Chancellor, Rishi Sunak has attempted to quell fears over coronavirus by offering refunds to employers for statutory sick pay along with many other business-boosting measures.
This was the first Budget that has been delivered in 499 days and much was expected based on the Government’s promises in its manifesto.
However, before the Chancellor could meet these pledges, he had to address the coronavirus crisis faced by British businesses.
Andrew Price, Managing Director of Torquay Chartered Accountants Andrew Price & Co, said that the £12 billion of measures announced to combat the economic impact of coronavirus would be vital for small businesses in the weeks to come – especially the embattled retail, leisure and hospitality sectors, which were offered relief on business rates.
Andrew said: “The Chancellor dedicated a third of his speech to the Government’s preparations for the economic impact of coronavirus and made several concessions to help small businesses shoulder the costs likely to be incurred during this epidemic.
“Businesses will appreciate this handout and it will certainly help to steady the ship a little during these uncertain times.”
Amongst the measures introduced was a commitment to refund SMEs sick pay bill with £2 billion of funding.
This will cover up to 14 days of an employee’s statutory sick pay (SSP) and will be open to businesses with up to 250 employees.
As well as offering a refund on SSP for staff affected by the coronavirus, Andrew said that the Government’s announcement to abolish business rates this year for businesses in the retail, leisure and hospitality sectors with a rateable value below £51,000 would be a massive help to the struggling sectors.
“We work with a number of clients in these sectors and they are already under a lot of pressure so this will certainly help as we approach the busy spring and summer season in the South West,” said Andrew.
The Government will also offer a £3,000 cash grant for businesses that are currently eligible for small business rates relief and has pledged to further reform the business rates system further in future to help smaller businesses.
Other giveaways included increasing the rate of Research & Development Expenditure Credit from 12 per cent to 13 per cent, increasing the Structures and Buildings Allowance from two to three per cent, a rise in NIC Employment Allowance to £4,000 and the biggest commitment to public spending since 1955.
Much of this investment will go towards the Government’s ambitious plans for infrastructure, including improvements to roads and broadband.
“We work with a wide range of businesses, many of whom are based in areas with poor infrastructure. This boost in spending could not have come at a better time,” added Andrew.
While there was plenty of positives to take away from the Budget, Andrew said that business owners should be aware of the cut to the Entrepreneurs’ Relief lifetime allowance.
As of the 11 March 2020, this allowance has been cut immediately from £10 million to just £1 million.
This move will affect those looking to sell their business, including those who are currently undergoing negotiations for a deal.
“Changes to Entrepreneurs’ Relief (ER) had been suggested in the Conservative manifesto, but the immediacy of this cut means that many will see the amount of relief they can receive against Capital Gains Tax (CGT) slashed,” said Andrew.
“This comes as a bit of sting in the tail considering the other measures the Chancellor has introduced.”
He added that following the Budget individuals will also benefit from the National Insurance threshold increasing from £8,632 to £9,500 next month, while a commitment to increase the National Living Wage to two-thirds of median earnings by 2024 will mean more take-home pay for some.
“Those affected by changes in the Budget, whether good or bad, should seek professional advice to understand how their finances and plans for the future are affected,” concluded Andrew.