In addition to the emergency interest rate cut announced by The Bank of England today from 0.75% to 0.25% which will make borrowing cheaper for businesses, here’s a rundown of key Budget measures which will affect small and medium businesses:
- As announced last week Statutory Sick Pay (SSP) is now payable by employers to unwell staff from day one not day three. However, as Chancellor Rishi Sunak explained, this would have been a burden on businesses unable to claim this back.
As part of a set of measures brought in to help businesses manage through the coronavirus crisis companies, will fewer than 250 staff. will now be able claim back their SSP payments for the first 14 days’ sickness.
- A business interruption loan scheme has been introduced enabling companies most affected by COVID-19
- Business rates, always a thorny issue, have been abolished for a one-year period for retail operations and leisure and hospitality businesses (shops, hotels, cinemas, restaurants etc), which are forecast to be some of the worst affected through loss of trade as a direct result of Covid-19. This will affect businesses with a rateable value up to £51,000
- In his first budget Rishi Sunak has also created a small business grant of £3,000 accessible by the smallest businesses which qualify for small business rate relief (in premises with a rateable value under £15,000)
- Corporate tax rates will remain at 19%
- For rural-based businesses, £5bn will be invested by the Government to provide gigabit broadband to remote areas of the country
- Entrepreneurs’ relief is reduced from the first £10m of Capital Gains Tax (CGT) to £1m, leaving 80 per cent of entrepreneurs who want to sell their businesses unaffected
- In boosting innovation, R&D tax credits will be increased from 12 per cent to 15 per cent
- The National Insurance (NI) threshold will be raised from £8,632 to £9,500. And the National Living Wage to be raised to over £10.50 an hour.
Reaction from Richard Pepler to the Budget impact on SMEs: “There are some good short-term measures here which will give some reassurance to business owners who are faced with several months of uncertainty. The refund of SSP for staff sickness is likely to ease some immediate anxiety and aid business cash flow planning. The business interruption loan scheme could also be useful – it will be interesting to see how quickly this can be accessed and what hoops owners might need to jump through to prove a business impact case. As a business funder ourselves we know SMEs want fast and flexible funding – red tape will not be welcome under these unprecedented circumstances.
“The smallest businesses stand to gain with the £3000 grant – arguably these companies are also the most susceptible when the economy is under pressure.
“Other measures were expected; no change in Corporation Tax, increase in the NI threshold and increases in the Living Wage. The increase in R&D tax credits will support investment in innovation.
“On balance, given the current climate, business owners are in a holding pattern and need to focus on damage limitation strategies which can be underpinned by a robust cash flow position to get through the next few months.”