Chancellor Rishi Sunak’s first Budget on Wednesday 11th March 2020 came as attention is focused on coronavirus, but what does it mean for your financial health?
The UK government have put in place measures that will help businesses ride out the possible storm coming if the UK needs to go into full lock down like Italy – hopefully it won’t get that bad!
Here’s our round up of the changes announced – we’ve split it into groups so its easier to see which parts affect you!
Sick Pay Extended
Small businesses with less than 250 employees will share a £2 billion pot of money to help cover the costs of sick pay if their employees are off sick with Coronavirus. This includes refunds of sick pay paid for sick pay up to 14 days from the HMRC.
Under Mr Sunak’s new measures, statutory sick pay (SSP) will be extended to all of those who are eligible and asked to self-isolate, even if they are not showing symptoms.
The payment, which works out at £94.25 per week, will be available from day one of quarantine.
Self-employed people are usual not eligible for SSP, but the Government will now be making it “quicker and easier to get benefits” including those on a zero hours contacts, or those earning less than £118 a week.
For people on lower incomes, Mr Sunak announced he would also be temporarily removing the minimum income floor in Universal Credit.
Sick Notes from 111
Employees will be able to get Coronavirus sick notes direct from 111, instead of just their doctor, in an attempt to limit the spread by infected people attending doctor’s surgeries.
Increase in Employers Allowance
Employers allowance will increase to £4,000 (from £3,000) per year from April 2020, meaning businesses will benefit in reduced costs for employing staff.
Minimum Wage Increases
The National Living Wage (NLW) (25yrs +) increases to £8.72 per hour from the beginning of April 2020 (was £8.21 p/hr), with the National Minimum Wage (NMW) per hour increasing as follows;
- 21 – 24 yrs old rises to £8.20 (was £7.70)
- 18 – 20 yrs old rises to £6.24 (was £6.15)
- Under 18 yrs old rises to £4.55 (was £4.35)
- Apprenticeship wages rise to £4.15 (was £3.90)
Delay of tax payments
The HMRC will allow businesses to defer tax payments over a pre-agreed period of time to help with the financial strain that businesses may see over the coming months.
The HMRC’s ‘Time to Pay‘ system has been extended with a dedicated helpline for businesses and taxpayers struggling to pay due to the impact of Coronavirus.
Business interruption loans
Businesses that face interruption from the Coronavirus will be eligible for ‘business interruption’ loans of up to £1.2million backed by the government.
Business Rates abolished for 1 year
Small & Medium sized businesses in Retail, Leisure, and Hospitality sectors with a rateable value of less than £51,000 will see their business rates abolished.
Cash grants for small rates relief businesses
A £3,000 grant will be available to businesses that have premises that qualify for small business rates relief.
Pub business rates discounts
Pubs to get a £5,000 discount on their business rates (rateable value below £100,000).
Corporation Tax remains at 19%
Previous announced rate reduction to 18% has been abolished.
Increase in Structure and Building allowance
The Structures and Buildings Allowance for Corporation Tax will be increased from 2% to 3%, giving relief on an extra £100,000 next year if you’re buying a building worth £10 million.
Entrepreneurs Relief reduced
Entrepreneurs relief will be cut from £10million to £1million. 80% of small businesses are not affected by this. (Available if you sell your business)
Further start up loan funding
A further £130million of funding will become available to extend start up loan program, as well as £5 billion of new export loans for businesses to ease the impact of Brexit.
Scale up loans
£200 million funding to be made available to businesses wishing to ‘scale up’.
Affecting employees and sole traders
- Increase in the National Insurance threshold to £9,500 from April 2020, saving a typical employee around £104 a year from April.
- National Living Wage to increase to £10.50 p/hr by 2024 (planned changes).
- New pay and leave entitlement for parents of babies who spend extended time in neonatal care.
VAT changes
- Scrapping VAT on digital publications from 1st December, including Books and Newspapers.
Further funding
- Further £5 billion funding to provide super-fast broadband to remote areas of the UK
- Further £120 million for repairs to flood defences
- £500 million of funding to extend 4G signals to 95% of the UK
- £12.2 billion of funding to build more affordable homes across the UK
- £500 million to support the rollout of super-fast electric vehicle charging network
- £533 million to extend Plug-in Grant schemes for ultra-low emission vehicles to 2023.
Duty Changes
- Fuel duty frozen for the tenth year
- Beer, wine and spirits frozen
- Cigarette duty to increase by 2%, rolling tobacco by 6%
- Menthol and Skinny Cigarettes, and flavoured rolling tobacco banned from 20th May 2020.
Other Changes
- Government Research & Development spending to increase to £22 billion by 2024/25
- Launching a new £100m scheme to help households and small businesses invest in low carbon heating systems, and consulting on introducing a Green Gas Levy to increase biomethane production for the gas grid
- Hospital car parking fees scrapped for selected groups including NHS staff on night shift, disabled and terminally ill patients.
- A 2% stamp duty surcharge will be introduced for overseas property buyers from 1st April 2021.
Please note that this is a roundup of some key Budget 2020 changes, and does not detail every item announced in the Budget 2020. To read the Budget 2020 document from the HMRC (if you have a few hours!) – you can do so here.
