How the 2020 Budget Will Impact Small Businesses
On March 11th, 2020, the new chancellor of the exchequer, Rishi Sunak, announced the spring 2020 budget, which saw a host of pledges to help businesses. It wasn’t surprising that the coronavirus outbreak (COVID-19) dominated the budget, causing many last-minute changes to help level the UK economy.
As a small business owner, here’s what you should know about the 2020 budget and how it can impact your company.
2020 budget at a glance
The key budget points that will impact businesses include:
- Statutory sick pay refund for small to medium-sized businesses (fewer than 250 employees)
- Support for increased costs or disruption to cashflow with loans of up to £1.2m
- A total fund of £30bn, including welfare and business support, sick-pay changes and local assistance
- Abolishment of business rates for small businesses in retail, leisure and hospitality
- £3,000 cash grant for small businesses that are eligible for rates relief
- A temporary cut in VAT if the crisis continues to reduce consumer demand
- Increasing the Employment Allowance from £3,000 to £4,000 to enable more businesses to be exempt from natural insurance contributions
- Increased spending on transportation and the environment
Statutory sick pay refunds
As expected, Rishi Sunak announced that small businesses will be given a statutory sick pay refund for any employees that have to self-isolate due to the coronavirus. This will only apply to businesses that have fewer than 250 employees and will pay out for a maximum of 14 days. It was also mentioned that employees can self-certify through the 111 NHS number.
While there are some measures to support the self-employed (such as easier access to benefits like the employment support allowance), there was no mention of extending the statutory sick pay to the self-employed at time of writing.
Disruption to cashflow
To help businesses cope with the impact of coronavirus, the government has introduced a number of methods to help support businesses that experience disruption to their cashflow. Businesses will be able to defer tax payments through the HMRC Time to Pay service, as well as apply for funds through the Business Interruption Loan Scheme, which will provide loans of up to £1.2m to support small and medium-sized businesses.
Abolished business rates for small businesses
In a measure likely to make a significant difference to small businesses across the UK, Sunak announced that business rates will be abolished for 12 months (the 2020/21 tax year). This applies to all businesses with a rateable value below £51,000 and all businesses operating in the hospitality, retail and leisure sectors.
This was another welcome measure introduced to help companies deal with the financial impact of the coronavirus and hopes to benefit a range of businesses from shops to gyms, cinemas and cafes.
£3,000 cash grants available for small businesses
Although there wasn’t much detail given for this plan, it was announced that cash grants of up to £3,000 will be available to the UK’s smallest businesses to help them with the impact of coronavirus.
Transport and the environment
As part of the government’s plan to level up the country, it was announced that money would be spent on transport, specifically improving road and rail networks. Sunak said he will also increase taxes on pollution, and raise funding for green transport solutions by £1bn.
Professional accounting services
Considering the budget and managing your business’s accounts can be overwhelming. Let the UWM Accountants step in to help. As a local team of accountants in Leeds, we provide professional accounting services to small businesses across Yorkshire and the UK.